Edcon employees will not receive their April salaries without assistance from the UIF.
Retailer Edcon has announced that it is now officially under business rescue. In a media statement released on Wednesday, the company said it had lost R2 billion in sales since March 15 and that, combined with the decline in collections of the debtor’s book, they were now unable to pay its suppliers for both the March and April month-ends. Meanwhile, April salaries would only possibly be paid with the assistance of the Unemployment Insurance Fund's Covid-19 TERS program.
According to reports, Edcon has 30 000 employees, a supply chain that includes 750 companies and floor space that accounts for a 10th of the occupancy in the country’s biggest shopping malls, the most of any company.
Edcon CEO Grant Pattison said the decision to go into business rescue was made in the best interest of the company and all its stakeholders, explaining that a significant portion of the R2.7 billion it had received from the Public Investment Corporation (PIC) and landlords to fund its restructuring strategy ha already been used to fund “losses for the financial years ending March 2019, and March 2020.”
Edcon said it had faced many challenges while implementing its turnaround strategy, with load shedding and South Africa’s economic recession slowing the little progress that was being made.
“The R2 billion in lost sales during the Covid-19 crisis period which included the necessary “social distancing” measures, lockdown and extended lockdown, has consumed the Group’s remaining cash.”
Edcon will open its doors and trade in line with the “level 4” regulations as indicated by the government’s “risk-adjusted strategy,” but will do so under business rescue.
