This independent retail analyst says going under business rescue does not mean Edcon will be saved, “it simply gives business rescue practitioners a chance to work out how they can save the company”.
Ultimately, Edcon has run out of money, says Vianello, and to save it, a lot of money needs to be injected into it — but most companies and investors are financially constrained because of the effect of measures taken to limit the spread of Covid-19.
The company says it was unable to pay its suppliers for both March and April. Paying April salaries will require assistance from the UIF’s programme. He says the company has expenses, no money to buy goods and a debtors book that needs to be collected on. Another problem, adds Vianello, is that when a company announces business rescue, customers don’t rush to pay their accounts.
Another factor is the increase in the unemployment rate, meaning people will not have enough money to buy anything beyond essential items or those needed for survival. He added that even if that is the case it’s better to let other stores fall off because demand is low. He believes Edcon could be saved if the two shareholders, the PIC and the UIF, come to the party and put more money into it.
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