Johannesburg - The Department of Economic Development intervened at the 11th hour to ensure that conditions were imposed by the Competition Tribunal on the proposed merger by Edcon Holdings and special purpose vehicles for the restructuring of the debt of South Africa’s biggest clothing retailer.
The proposed merger was approved by the Competition Tribunal yesterday, subject to the imposition of conditions related to job security and import substitution.
A document outlining the conditions said Edcon operated 1 377 stores across South Africa and had a combined workforce of 43 630 employees in South Africa, comprising 19 681 full time employees and 23 949 other employees, including casual staff. It said Edcon planned to employ and train a further 2 000 new staff, who would be deployed in its stores throughout South Africa as part of its strategic focus on improving customer service delivery across the group.
Depending on circumstances, such as prevailing macro and micro economic and trading conditions, and internal conditions, including Edcon’s financial position and operating performance, these additional staff members were likely to be employed within two years of the approval of the financial restructuring of the group.
Edcon also committed to fostering and developing a more competitive production environment in South Africa through the building and implementing of an import replacement programme. The programme will involve expanding its procurement from South African suppliers and building relationships with these suppliers of products for resale in its stores to mitigate the risk of exchange rate fluctuations, secure faster supply chain turnaround and cater for local consumer preferences.
The proposed merger follows Edcon in July announcing it had received support from its bondholders and bank lenders to obtain R1.5 billion in bridge financing to restructure the group’s debt.
BUSINESS REPORT