Ellerine Furnishers (Pty) Ltd commenced with Business Rescue on 7 August 2014. This has been the largest Business Rescue to date based on the Public Interest score of the Company.
Ellerine Furnishers is wholly owned by Ellerine Holdings Limited, which in turn is wholly owned by African Bank Investments Limited. The Company operated as a retailer of furniture and household appliances, under the following well established brands:
- Furniture City
- Geen & Richards
Ellerine Furnishers employed almost 8000 people and had operations in six African countries, comprising over 1000 stores.
In 2010 the provision of credit and financial services component was sold to African Bank. This resulted in a significant decrease in the Company’s income and profitability.
A decision was taken that no further funding would be provided by ABIL or African Bank to Ellerine Furnishers. Due to this decision by ABIL the directors of Ellerine Furnishers placed the Company in Business Rescue.
- Ellerine Furnishers held a deposit of R472million with African Bank that would have been utilised as Post Commencement Funding (PCF), however the Bank was placed under Curatorship on the 10 August 2014.
- With no accessible funds in the bank accounts, there was an urgent need to secure PCF.
- The company’s retail sales were negatively impacted by further credit reduction measures and lower customer demand for credit.
- Depressed economic climate.
- High fixed cost base.
- Employees and critical suppliers needed to be paid.
- Suppliers claiming reservation of title over stock.
- A number of onerous contracts.
- Incorrect stock mix as well as a significant amount of slow moving and obsolete stock.
- Balancing the interests of all the various stakeholders.
- Competition Commission Approval in various jurisdictions for the sale of the various brands and businesses in the group.
- PCF was secured after extensive discussions with African Bank. An agreement was reached where we were able to access the deposit by utilising the store footprint to collect on the African Bank debtors’ book and drawing down on the deposit in amounts equivalent to the collections.
- Cancelled existing stock orders at the date of Business Rescue
- Initiated key cost cutting initiatives for expenses.
- Accelerated M&A process.
- Accelerated store closures that resulted in significant cost savings.
- Realisation of stock in the South African operations, most of which was traded at a margin.
- Cancellation of all contracts that were no longer required.
- Two court applications to court to cancel leases that resulted in significant savings.
- Offers to staff of voluntary separation packages were largely accepted, resulting in a significant saving.
- Retention of key staff to assist with the implementation of the Business Rescue Plan
The Plan was published and voted in favour by 99% of the creditors in attendance or by proxy. The Plan is in the process of being implemented with the following already achieved:
- Sale of Dial-a-Bed to Coricraft.
- Sale of a number of the Beares stores to Lewis Group.
- Sale of business agreements have been concluded with the Lewis Group for the retail operations in Botswana, Lesotho, Namibia and Swaziland.
- The retail operation in Zambia remains unsold.
- Approximately 2000 jobs have been saved through the sale of a number of divisions.
- The Liquidation dividend calculated was projected to be between 0c- 13c in the Rand.
- The dividend paid to creditors to date has far exceeded the ‘best case’ dividend that creditors would have received in liquidation.
- We estimate the final dividend to be approximately 42c in the Rand.