December 16, 2018 / 1:12 PM / 8 months ago

South African retailer Edcon in talks with landlords about reducing rentals

JOHANNESBURG, Dec 16 (Reuters) - South African retailer Edcon is in talks with shopping mall owners about a two-year 41 percent rent reduction in exchange for a small stake in the company, the Sunday Times reported.

Edcon has been grappling with an over-leveraged capital structure for several years, after troubles in its credit business in 2014 coincided with an economic slowdown and weak consumer spending at home.

Bain Capital, which bought the 80 year old company more than a decade ago in a highly leveraged deal, gave up equity control last year to creditors that included fund manger Franklin Templeton, local lenders Standard Bank and Absa .

Citing a letter addressed to Edcon’s landlords, the Sunday Times reported that Edcon was seeking a two-year 41 percent “rent holiday” in exchange for a 5 percent share in the business.

Edcon confirmed in a statement that it was it was in talks with some shopping mall owners about a proposal to reduce rents.

“This and other elements of a proposed agreement are in the final stages of resolution and no further commentary can be added at this stage,” it said.

Edcon, which vies for market share with TFG , Truworths and international chains such as Zara and H&M, is one the biggest names in South African retail, employing more than 14,000 permanent full-time staff in over 1,100 stores, according to its website. (Reporting by Tiisetso Motsoeneng; Editing by Elaine Hardcastle)

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