A Tale of Two Retail Chains in South Africa

For a moment it seemed as if South African retail giant Edcon was on the verge of closing after almost a century of operations. Fortunately, a consortium consisting of the Unemployment Insurance Fund (UIF), debt holders and landlords came to the rescue of the troubled group in a deal that was said to have averted the loss of thousands of jobs, not to mention prevented hundreds of thousands of square feet of suddenly empty retail space in all the prime shopping centers around the country. Edcon, whose flagship property is the department store Edgars, received a lifeline amounting to 2.7 billion South African rand, or about $190 million at current exchange. The fresh funds will allow the cash-strapped company to recapitalize. Edcon has been struggling with a debt burden following its 2007 acquisition by U.S.-based Bain Capital in a 25 billion rand, or $176 million, private equity deal, which saw its delisting from the Johannesburg Stock Exchange (JSE). In 2016, Bain cut its losses and transferred ownership of Edcon to several of its creditors. The retailer remained in precarious shape financially and operationally, suffering from too many stores, declining sales, lost market share and an incoherent strategy. According to an official statement, the

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