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Edcon Hldgs seeks funding to stave off liquidation
EDCON Holdings Ltd asked owners of South African malls in which it operates for a 41 per cent reduction in rent as its seeks to secure funding to stave off liquidation, the Sunday Times reported.
The company that owns chains including Edgars and Jet offered a 5 per cent stake in the business in exchange for a two-year agreement on rentals, the Johannesburg-based newspaper said, citing a letter to landlords.
This would help Edcon secure 1.9 billion rand (S$181 million) in emergency funding from banks and the Public Investment Corp, it said.
The 89-year-old company, South Africa's biggest non-food retailer, has long struggled to stay afloat amid weak consumer spending and economic growth in South Africa, and had to be taken over by banks and bondholders in 2016 to avoid a collapse.
It announced this year plans to close some chains and to cut floor space by 17 per cent over five years.
With more than 14,000 permanent employees, Edcon is a significant employer in a country where more than one in four people are out of work.
Edcon confirmed that it's in the final stages of talks with landlords and suppliers and that "significant progress" was being made, adding it was seeing good sales in December.
"We are very close to announcing a complete recapitalisation of the business that should endure for the next few years," the company said in an emailed statement.
"There are various options being considered by all stakeholders with certain mall owners and landlords assessing Edcon's rent-reduction proposal." BLOOMBERG