London - Edcon Holdings’ secured bondholders are readying for debt talks with the South African fashion retailer.
A group has hired adviser PJT Partners and law firm Weil, Gotshal & Manges to help with negotiations, PJT said in a statement on Thursday. The investors, who hold secured Edcon 2018 notes in euros and dollars with a combined value of about $945 million, are seeking to enlist other bondholders.
Junior Edcon creditors agreed to take losses last year as the company struggled to meet debt commitments due to a weaker rand and slower sales at its chains, including Edgars and Jet. The retailer was loaded with foreign-currency debt through a 2007 acquisition by Bain Capital Partners.
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Calls and e-mails to a company spokeswoman in Johannesburg weren’t answered.
“The business can’t maintain the level of debt and still invest,” CEO Bernie Brookes said in November.
Standard & Poor’s said in a report last month that Edcon’s capital structure was “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.
Edcon in June asked holders of 425 million euros of junior bonds due 2019 to take a loss.
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Almost all of them accepted an exchange offer, which cut the retailer’s net-cash interest payment obligations by about R1 billion ($65 million) a year.
-With assistance from Mark McCord.
BLOOMBERG