What happened at Edcon is for the history books.
Here’s how Edcon relinquished its ownership of Boardmans, CNA, Jet, Legit, and Edgars as well as a recap of Edcon’s leveraged buyout.
[Thread]
Here’s how Edcon relinquished its ownership of Boardmans, CNA, Jet, Legit, and Edgars as well as a recap of Edcon’s leveraged buyout.
[Thread]
Boardmans
Edcon bought Boardmans from Pick ‘n Pay for ~R94m in 2003.
Edcon subsequently discounted the 26 stores.
Some Boardmans stores were rebranded as Edgars Home and housed inside Edgars stores.
Edcon bought Boardmans from Pick ‘n Pay for ~R94m in 2003.
Edcon subsequently discounted the 26 stores.
Some Boardmans stores were rebranded as Edgars Home and housed inside Edgars stores.
CNA.
2001, Wooltru later sold CNA to Gordon Kay for R150m. CNA had made a R38m loss and had a net asset value of R123m.
Edcon bought 139 CNA stores in 2002 for R141m.
In 2020, Astoria Investments purchased 70% of CNA Holdings from Edcon for R1.2m which had 167 stores.
2001, Wooltru later sold CNA to Gordon Kay for R150m. CNA had made a R38m loss and had a net asset value of R123m.
Edcon bought 139 CNA stores in 2002 for R141m.
In 2020, Astoria Investments purchased 70% of CNA Holdings from Edcon for R1.2m which had 167 stores.
Jet
In 2020, TFG acquired the Jet business for ~R385,3 million which included 425 Jet stores. This resulted in the recognition of a bargain purchase gain of R709,0 million.
Jet Stores have turnover +-R3bn since acquisition.
Jet is an 80% cash business.
In 2020, TFG acquired the Jet business for ~R385,3 million which included 425 Jet stores. This resulted in the recognition of a bargain purchase gain of R709,0 million.
Jet Stores have turnover +-R3bn since acquisition.
Jet is an 80% cash business.
Legit
Retailability (Pty) Ltd bought Legit from Edcon in 2016 for R637m.
Retailability is jointly controlled by Helvetia Finance Limited t/a C.R. Lines & Associates, and Metier Investment and Advisory Services (Pty) Ltd.
Retailability (Pty) Ltd bought Legit from Edcon in 2016 for R637m.
Retailability is jointly controlled by Helvetia Finance Limited t/a C.R. Lines & Associates, and Metier Investment and Advisory Services (Pty) Ltd.
Edgar’s
2020, Retailability ( Pty) agreed to acquire 120 Edgars stores (out of a total of 181 in South Africa) owned by Edcon.
2020, Retailability ( Pty) agreed to acquire 120 Edgars stores (out of a total of 181 in South Africa) owned by Edcon.
In 2012, ABSA bought the credit card portfolio of Edcon for R10bn which had 3.8m active card accounts which was later sold t
2019, ABSA sold it to RCS for an undisclosed amount.
The RCS deal included selling credit cards, store cards and personal loans to Edcon's customers.
2019, ABSA sold it to RCS for an undisclosed amount.
The RCS deal included selling credit cards, store cards and personal loans to Edcon's customers.
The split of the rewards/loyalty points between Edgars ThankU and ThankU caused headaches.
Unlike the TGF that has one rewards card, Edcon thought it was smart to have two rewards points systems which confused shoppers.
Unlike the TGF that has one rewards card, Edcon thought it was smart to have two rewards points systems which confused shoppers.
In 2007, Edcon was listed on the JSE.
Bain Capital then acquired 100% of Edcon for R46 per share which represented a premium of 51.3% and valued Edcon at R25 billion.
Bain Capital then took Edcon private (delisted it from the JSE).
Bain Capital then acquired 100% of Edcon for R46 per share which represented a premium of 51.3% and valued Edcon at R25 billion.
Bain Capital then took Edcon private (delisted it from the JSE).
How did Bain Capital finance the Edcon acquisition?
Bain used an LBO which was heavily funded by $- and €-denominated debt of $2bn which Edcon couldn't pay back.
ZAR to $ was R8 at the time of the LBO and hedging against currency volatility wasn’t making the news headlines.
Bain used an LBO which was heavily funded by $- and €-denominated debt of $2bn which Edcon couldn't pay back.
ZAR to $ was R8 at the time of the LBO and hedging against currency volatility wasn’t making the news headlines.
Edcon was the largest clothing retailer in South Africa with very low debt levels.
The Rand to US dollar was relatively low and servicing the debt was not going to be a problem at that exchange rate.
However, the Global Financial Crisis came and shook things up.
The Rand to US dollar was relatively low and servicing the debt was not going to be a problem at that exchange rate.
However, the Global Financial Crisis came and shook things up.
Yes the Rand to $ was low in 2008, but not hedging aggressively against currency volatility when a majority (+-80%) of your earnings are in Rands which is depreciating against the US dollar and Euro which is the currency in which you service your debt raised a lot of eyebrows.
Debt levels ⬆️ post 2008.
In 2016 Edcon, said that its net debt had reached R25.4bn ($1.8bn) which was 9.6 times its Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation).
In 2016 Edcon, said that its net debt had reached R25.4bn ($1.8bn) which was 9.6 times its Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation).
2016, 28% of Edcon’s total gross debt was hedged by virtue of it being denominated in local currency.
72% (Euro and US dollar denominated debt) was unhedged.
2015: €1=R13.12
$1=R12.04
2016: €1=R17.26
$1=R15.46
Net financing cost ⬆️ by R827m from R3.4bn to R4.2bn.
72% (Euro and US dollar denominated debt) was unhedged.
2015: €1=R13.12
$1=R12.04
2016: €1=R17.26
$1=R15.46
Net financing cost ⬆️ by R827m from R3.4bn to R4.2bn.
When you get a chance, check out @Banker__X for more finance related threads.
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