Edcon cuts debt by R4.5bn

1 Dec 2015

Apparel group Edcon says it has won agreement with all of its bank lenders to extend the due dates of its bank debt of more than R7.9bn.

WorldRetailCongress.com

In addition, the group has secured new commitments for a facility of R1.85bn to refinance the entirety of its obligations under the existing R1bn secured notes due in 2016 and the R1bn liquidity facility. As a result, none of Edcon's material debt obligations will mature for at least two years.

Edcon Group has also concluded the final stage of the exchange offer launched in June this year in respect of its secured notes due in 2019.

The effect of the combined transactions will come to about R4.5bn, including a decrease in cash-pay leverage of about 25%. The deal represents a strong statement of support from Edcon's existing South African and international lenders under its revolving and term-loan facilities, as well as new lenders into the capital structure.

Edcon has the support of its broad lender group to continue operational improvements by revising its financial covenants to increase headroom. The transactions will also secure a reduction in Edcon's annual net cash interest payments by about R1bn.

The group expects the increased headroom and improved cash position to support its customer-centric turnaround strategy.

CEO Bernie Brookes said Edcon's lenders had recognised the potential for Edcon to continue to grow profitably, the group having recently announced its fifth consecutive quarter of ebitda (earnings before interest, tax, depreciation and amortisation) growth.

"With this long-term financing in place, we can focus on our customers and returning Edcon to its pre-eminent position in the market."

Source: BDpro

Source: I-Net Bridge

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