In March, Edcon announced that it is now officially under business rescue, explaining it has lost R2bn in sales since March 15 and was now unable to pay its suppliers for both the March and April month-ends.
The retrenchment notice, dated June 10, addressed to all employees and labour union SA Commercial, Catering and Allied Workers Union (Saccawu) stated the company's 2019 restructuring plan which included sourcing R2.7bn from among others the Public Investment Corporation was on track until the end of December 2019.
"The company's financial position has recently become distressed due to the following; poor sales... the recession in the South African economy, exacerbated by frequent load-shedding which disrupted purchasing patterns," it said.
It also indicated that its business plan suffered as "the advent of the Covid-19 pandemic which resulted in the government announcing and implementing measures, including the initial 45-day hard lockdown period which prohibited trading of nonessential products."
Saccawu's secretariat coordinator Lucas Ramatlhodi said the union felt the decision to put Edcon under business rescue was "very premature".
"The company had received a cash injection in a form of a bailout [from the PIC] in the very recent past, we still haven't received a feedback in terms of how the bailout had assisted in terms of turning the company around."
He said they have raised these concerns with trade, industry and competition minister Ebrahim Patel.
"We lack confidence because we don't know of success stories out of a business rescue, what we know is an end result. of cutting jobs and ultimately collapsing the company ." Ramatlhodi said.
Lance Schapiro, one of the two business rescue practitioners, said their plan was still in its preliminary phase.
"As at today no binding offers have been received and therefore we cannot predict which parts of Edcon will be successfully sold. Therefore, it is prudent to start consultations with all employees in terms of section 189 and then, should an offer be received, accepted and implemented, those affected employees would be. transferred to the new owners." Schapiro said the intention was to sell the entire business. "This would result in a significant number of jobs being saved. A sale of parts of the business will result in job losses."