Banks and bondholders have taken control of struggling South African clothes retailer Edcon, its chief executive said on Tuesday.
Creditors in Edcon have agreed to swap R21 billion ($1.5 billion) of debt for equity control of the retailer.
Taken private in a highly leveraged R25 billion (or $3.5 billion at the time) buyout by Bain 2007, Edcon has struggled to grow at a fast enough rate to pay down debt.
“We have been living beyond our means, expenditure was more than our income,” CEO Bernie Brookes told a news conference.
New owners of the company, which also sells household goods and footwear, are Standard Bank, Barclays Africa Group, FirstRand, Standard Chartered and Investec. Others are Franklin Templeton and Harvard Pension Fund.
The retailer 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 in South Africa.
Brookes said Edcon reached “a catastrophic situation in March” and had to choose between seeking protection from creditors – called business rescue in South Africa and similar to Chapter 11 in the United States – or not paying debt holders.