Johannesburg - Ellerine Holdings, the furniture retail unit of failed African Bank Investments Ltd, said it may save more jobs and stores after South African competitors expressed interest in taking over some branches.
Two “major” South African companies involved in furniture retailing may take the leases on more than 500 stores previously run by Ellerine, Les Matuson, one of the company’s administrators, said in an interview in Johannesburg today, without identifying them.
Such a deal will mitigate the damage for landlords and create jobs for some of the 7 060 people employed when Ellerine declared bankruptcy in August, he said.
In separate talks, a listed South African company with sufficient funding has given a 400 million rand preliminary offer for Ellerine’s 77 stores across five African countries, Matuson said.
The offer may become binding on December 1 and there have been other interested bidders for what is a viable business with funding and supplies, he said.
Ellerine went into business rescue, akin to Chapter 11 bankruptcy, on August 8 after African Bank collapsed amid mounting losses.
The retailer sold two of its six furniture brands and may close all stores not sold or leased to other retailers by the end of January.
Under the business-rescue plan, which creditors voted in favour of today, those owed money may receive as much as 30 cents on the rand.
The disposal of the operations outside of South Africa will save about 1 000 jobs, Matuson said in a presentation to the creditors in Johannesburg today, without identifying the bidders.
About 75 percent of Ellerine’s employees have already chosen voluntary redundancy packages, he said.
South Africa’s largest furniture retailers include Shoprite Holdings, Steinhoff International and Lewis Group.
Of its six store brands, Ellerine sold Dial a Bed to Coricraft for 200 million rand and Lewis agreed to buy the Beares brand for 40 million rand on October 31.
While there were more than 50 bidders in the asset-sale process, brands Ellerine, Geen & Richards, Wetherly’s and Furniture City didn’t receive viable offers. - Bloomberg News