How much Edcon owes and to whom

IN THE QUEUE: HIERARCHY OF CREDITORS FINALISED

The single-largest creditor is the Unemployment Insurance Fund, which is owed R888m.

The list of Edcon’s secured creditors, published as part of the business rescue plan, reveals R3.7 billion is owed to more than 80 entities. The list of unsecured creditors is likely far larger, but these businesses are either fourth or last in the queue, depending on their status.

The business rescue practitioners announced they are pursuing an accelerated sales process of parts of the Edcon group after no buyers nor investors were found for the entire business.

Aside from the operating divisions, Edgars and Jet, the group’s second-look credit book will no doubt find a buyer.

It is unclear what value the Thank U rewards business would have by itself. They hope to conclude this by July with a completion of the transaction(s) as soon as possible. There are 15 interested parties.

The single largest creditor is the Unemployment Insurance Fund (UIF), represented by the Public Investment Corporation. The UIF is owed R888.8 million, thanks to instruments that allow it a conditional claim under business rescue (and/or liquidation).

It invested R1.2 billion into the group as part of a R2.7 billion recapitalisation in March last year.

Next-largest is the R834 million owed to various Apollo entities, while the third-biggest claim is from AlbaCore Capital (R496 million).

The former is the global private equity group, while the latter is a European investment firm that focuses on “private debt and opportunistic credit investments”.

They would have claims as bondholders under the former Edcon structure. Those debt holders became equity holders as part of the recapitalisation.

Four commercial and investment banks have claims totalling R976 million:

Standard Bank: R380 013 468; Absa Bank: R310 925 395; Investec Bank: R156 524 372; FirstRand Bank (through RMB): R128 763 782.

A further three global investment banks have claims totalling R358 million, while listed property groups have claims totalling roughly R100 million (primarily because these landlords took up equity in Edcon as part of the recapitalisation), plus other landlords are owed R37.2 million.

As at 30 April, assets totalling nearly R4.4 billion were held as security by the creditors. These include property, plant, equipment, trade receivables, amounts owed by related parties (mostly African operations), sundry receivables and prepayments as well as cash.

Under the business rescue plan, the secured creditors will receive all trading proceeds being generated from the sale of stock under the current business rescue process as well as the proceeds from the sale of Edcon’s second-look credit book.

Any proceeds from the accelerated sales process will be allocated in the following order:

Business rescue costs (including advisors and legal costs);

Employees (to the extent that they have not been paid during the business rescue process);

Secured (post-commencement finance) creditors;

Unsecured (post-commencement finance) creditors;

Unsecured/general concurrent creditors.

The business rescue practitioners say without an accelerated sale of the business or parts thereof, a wind-down process is still preferable to liquidation.

Secured creditors would receive 19 cents in the rand under a wind-down process and only 5.5 cents in the rand in a liquidation.

Hilton Tarrant works at YFM