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(Bloomberg) — Edcon Holdings (Pty) Ltd. received almost 80 percent bondholder support for a plan to defer cash-pay interest obligations to December to enable South Africa’s largest clothing retailer to focus on turning around its operations. Investors holding almost 80 percent of its $950 million dollar- and euro-denominated secured notes due March 2018 have backed the proposal, the Johannesburg-based company owned by Bain Capital Partners LLC said in a statement on Friday. It needed support from at least 75 percent of them to make the moratorium binding on all bondholders, Bloomberg reported on April 12, citing two people who asked not to be identified because the information is private.
A 30-day grace period ended on Thursday for a $45 million interest payment the company skipped last month, according to data compiled by Bloomberg. The deferral will allow the owner of the Edgars, Jet and CNA chains to postpone the payment of $110 million of bond and loan obligations, it said in the statement. The company got unanimous support from its revolving-credit facility and term-loan lenders, Edcon said.
“This payment deferral is yet another positive step in our ongoing strategic process linked to our operational turnaround,” Chief Executive Officer Bernie Brookes, who joined the retailer last year, said in the statement. “We will continue discussions with our lenders and bondholders to further optimize our capital structure in support of our long term growth.”
Read also: Bain’s strategic blunder – Edcon may default on bond payments
Edcon’s capital structure is “unsustainable in the long term” due to high debt and interest costs, the concentration of debt maturing in 2017 and 2018, and unhedged exposure to foreign-currency debt, Standard & Poor’s said this year.
South African retailers and consumers are under pressure as inflation rises and a weakening rand prompted the central bank to raise interest rates by 0.75 percentage points this year, increasing repayment costs for those with loans or mortgages.
