Retail Therapy - Financial Restructuring of Edcon

Edcon (2017)

A&O advised the term loan lenders on the ZAR19.7 billion ($1.5 billion) financial restructuring of indebtedness owed by Edcon Holdings Limited and its subsidiaries. Edcon is one of the largest clothing, footwear and textiles retailing groups in southern Africa and trades through a range of retail formats. The deal was the first major leveraged buyout restructuring to make use of South African compromise proceedings and the largest successful restructuring in South Africa.

The restructuring delivered a more sustainable and simplified capital structure and a significantly deleveraged operating group, while respecting the priorities among the creditors in the pre-existing and multi-levelled capital structure. Multiple regulatory approvals were required to implement the restructuring, including from the South African Competition Commission, the Financial Surveillance Department of the South African Reserve Bank and the South African Revenue Service.

“Highly complex and challenging”

Lional Shawe (Partner, Johannesburg Restructuring) commented: “The Edcon restructuring transaction was a highly complex and challenging restructuring due to the complicated pre-existing financing structure and the number of parties involved with differing financial interests. A&O was able to leverage off the experience and expertise of lawyers across a number of offices and disciplines to assist in achieving a successful restructuring.”

The A&O team

The restructuring involved teams across the London, Johannesburg and New York offices.

The Johannesburg restructuring team was led by partners Lionel Shawe and Kathleen Wong, assisted by associates Grace McLeish, At van der Merwe and candidate attorney Carly Hyland.

The London restructuring team was led by partner Ian Field.

The US corporate finance team, based in London was led by partner Jake Keaveny and senior associate John Kicken.

The London ICM team was led by partner Paul Cluley, assisted by associate James Bryson.

The US restructuring and litigation team, based in New York, was led by partners Elizabeth Leckie, Laura Hall and Daniel Guyder.