New HoldCo acquisition of Edgars should go ahead – commission
IOL - COMPANIES / 02 MAY 2019, 08:00 / SANDILE MCHUNU
DURBAN – Struggling Edcon on Tuesday received a major lease of life after the Competition Commission recommended that the Competition Tribunal approve the proposed acquisition of Edgars Consolidated Stores Limited by New HoldCo to save jobs.
The commission imposed strict conditions similar to those on the Edcon merger with Parentco following a failure to restructure the group in 2016.
Among others, the conditions stipulate that the Edcon Group should prevent job losses, increase procurement from local suppliers and maintain black economic empowerment participation.
Competition commissioner Tembinkosi Bonakele said the proposed transaction would mitigate the dire financial position of the Edcon Group and avoid a potential liquidation, which may result in job losses.
“The commission believes that the proposed transaction will have an overall positive effect on employment, particular on the retail industrial sector, because it seeks to preserve the job levels within the Edcon Group,” Bonakele said.
“The group intends to employ additional staff in the future.
“A significant number of Edcon employees could lose their employment were the business to be placed under business rescue proceedings if the acquisition is not approved.”
Edcon has been struggling to survive after Bain Capital Private Equity handed the company to creditors after a 2007 buyout turned sour.
Chief executive Grant Pattisson has been working on a turnaround and restructuring strategy for much of his year in charge.
In March, Edcon secured a R2.7billion deal with lenders, landlords and the Public Investment Corporation as part of its latest restructuring plan to save the group.
The deal saw Edcon freed of all interest-bearing debt and rent reductions from the country’s top retail space owners, alongside its Edgars, Jet and CNA subsidiaries.
New HoldCo is a shelf company with no previous operations or activities in South Africa.
It has been established for the purpose of acquiring the entire issued share capital of the Edcon Group.
Shareholders include local and international financial investors in the form of private equity investment firms and banks.
On Tuesday, the commission said it had found that the proposed transaction was unlikely to result in a substantial prevention or lessening of competition in the relevant markets.
The New HoldCo acquisition was expected to allay fears of massive job losses, which could see nearly 150000 Edcon employees being retrenched.
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