No retrenchment of Ellerines workers yet

Les Matuson, one of the business rescue practitioners responsible for African Bank Investments Limited has confirmed that no decision on retrenchments of Ellerines workers has been made yet. Image: Matuson & Associates

Joint business rescue practitioners Les Matuson of Matuson & Associates and Jay Pema of Matasis Consulting, had "not yet made an in-principle decision to retrench any employees", said spokesman Barry Kaganson.

He said Ellerines was investigating all possibilities to restore the profitability of its business.

Ellerines, which is owned by African Bank Investments Ltd (Abil), was placed under business rescue on 7 August, a day after Abil released a trading update that alarmed the market and saw its share price lose 90% of its value in the next three days.

It has about 6,600 employees through the brands in its stable which include Dial-a-Bed, Wetherlys, Geen & Richards, Furniture City and Beares.

Abil bought Ellerines for R9.2bn in 2008 and had been trying to dispose of the furniture retailer for the past year.

Any retrenchments will be done within the law

Kaganson said if Ellerines decided to retrench employees - as analysts widely expect it will have to do - this will be done in line with the law.

"Should Ellerines make an in-principle decision, at any stage, to retrench any employees, it will issue the relevant notices to the potentially affected employees and/or trade unions in accordance with the provisions of the Labour Relations Act," he said.

On 22 August, the business rescue practitioners said they had met employees and creditors and would be forming a creditors' committee and an employee forum, which would include trade unions, head office and branch network staff. At the time, Matuson said: "Every effort is being made to ensure that job losses are kept to a minimum and to enable the company to continue on a solvent basis."

Abil has been suspended from the JSE, while subsidiary African Bank has been placed under curatorship. Before Abil fell, acting Chief Executive Nithia Nalliah said disposing of Ellerines would have a negative capital effect of between R1.5bn and R2.5bn on Abil. Ellerines had been receiving at least R70m a month from Abil before it was placed in business rescue.

Source: Business Day via I-Net Bridge