In the latest episode of the Stuttafords business rescue saga, Ellerines Bros withdrew their offer to fund the ailing retailer by R12-m as part of the third business rescue plan they proposed in March – which was accepted by the holders of the majority shares. At a meeting of irate creditors and employees the liquidation option was discussed.
Ellerines claims that the business rescue practitioners (BRPs) failed to negotiate a R60-m loan facility for operating expenses with the biggest creditor, Nedbank, nor did they sign new lease agreements with landlords, which were provisions of their rescue proposal (see more). They also claim that they were not allowed access to Stuttafords’ financial records to determine if the retailer can be rescued.
Ellerines subsequently withdrew its offer to buy 600 000 shares at R20 each (total R12-m) for a 76% stake in the department store.
Another element of the Ellerines rescue proposal was that the current management team step down and a retail expert appointed until a new buyer could be found. According to the BRPs a suitable candidate or buyer has not yet stepped forward.
Following the exchange of some acrimonious letters between lawyers, angry creditors and Stuttafords staff members were told at a meeting on April 26 that time is running out to save the 159-year old retailer.
According to the BRPs a new business rescue plan – similar to the second rescue plan – has to be approved by May 31. This resurrected plan, which offered creditors 5% upon acceptance and 18% over the next 18 months – was outvoted at a previous shareholders and creditors meeting.
Although brands have supplied stock on consignment, Stuttafords’ recovery is further hampered by the tough economic conditions that are keeping consumers out of stores.
Should the retailer be liquidated, SARS would first be paid the R28-m owed, followed by creditors, like Nedbank, who secured their debt. The 763 Stuttafords employers in its nine department stores and 16 brand concept stores will be the biggest losers as severance pay will be capped at R12 000 plus R4 000 leave pay.