Johannesburg - Edcon Holdings is asking bondholders to support a deferral in interest payments until the end of the year, according to two people familiar with the matter.
The postponement would give private equity owner Bain Capital Partners time to explore options including the sale of all or some of the business, the people said.
A spokeswoman for Bain employed by Camarco in London declined to comment on the plan.
The largest South African clothing retailer needed investors in at least 75 percent of the $950 million (R13.9 billion) of notes due March 2018 to support the moratorium to make it binding on all bondholders, said the people, who asked not to be identified because the information is private.
A 30-day grace period ends tomorrow for a $45m interest payment the company skipped last month, according to data compiled by Bloomberg. It owes another $45m in September.
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, Standard & Poor’s said this year. The retailer was loaded with debt through a 2007 acquisition by Bain.
A group of the 2018 secured bondholders hired adviser PJT Partners and law firm Weil, Gotshal & Manges to help negotiate with the company last month.
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.
Edcon’s March 2018 bonds fell 0.2 percent to 34.23 cents on the dollar by 7.32am after dropping 3.6 percent this week.
The securities are down 57 percent in the past 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 point this year, increasing repayment costs for those with loans or mortgages.
Retail sales growth slowed to 2.6 percent in the year to February, from 3.1 percent the previous month, a report by the government statistics agency showed yesterday, according to the median estimate of economists in a Bloomberg survey.
BLOOMBERG