Edcon's rescue deal gets thumbs up from competition watchdog
By Larry Claasen - May 3rd, 15:37
Without the deal with its creditors, there would have been a real danger that the retailer, which employs about 40,000 people, 14,000 of whom are full-time, would have gone under. The closure of Edcon would have had far-reaching implications, as its chains account for about 10% retail space in SA, and source much of their clothing from local manufacturers. Given the implications of Edcon shutting its doors, the government has been very supportive of the deal.
This was noted by competition commissioner Tembinkosi Bonakele, who said the regulator believed the proposed transaction would have an overall positive effect on employment, particular on the retail industrial sector because it was meant to preserve jobs within Edcon.
"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," Bonakele said.
The deal was the second time Edcon had to be saved by its creditors in three years. Back in 2016, its banks swapped R20bn in debt for equity.
The commission said the conditions of the second deal were a result of the merging parties and the government agreeing that these conditions be similar to the one concluded in 2016. That deal also required its new owners to support local clothing producers and BEE.
The first deal saw Parentco, an entity made up of Franklin Templeton, Standard Bank, Barclays Africa Group, FirstRand, Standard Chartered, Investec and Harvard Pension Fund taking control of Edcon.Business Live
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