Edcon ups Edgars stake

EDGARS Stores Limited (EDL) shareholders have approved the acquisition of trademarks to brands owned by the retailer's South African shareholder Edcon in exchange for an increased stake in the company.

The transaction will see Edcon increase its shareholding in EDL from 38,07% to 41,07%, through its 100%-owned local outfit, Bellfield Limited.

Edgars and Edcon agreed to settle the purchase consideration of the franchise brands for $1,5 million through the issuance of 15 000 000 EDL ordinary shares.

The is expected to reduce Edgar's costs associated with paying franchise fees for Jet and Edgars brands and other Edcon trademarks and brands that it operates locally.

In a statement issued on January 22, 2019, EDL secretary Buhle Mpofu said the company held a shareholders' extraordinary general meeting on January 16, where the resolution was passed and now awaits exchange control approval from the Reserve Bank of Zimbabwe and approval of the listing of ordinary shares on the Zimbabwe Stock Exchange (ZSE).

"The directors of the company (or any duly authorised committee therefore) be, and are, hereby authorised to do all such things that they may consider necessary or desirable to give effect to, or in connection with, the proposed transaction," Mpofu said.

EDL operates the Jet and Edgars brands and has rights to a number of other Edcon trademarks and brands that are currently dormant in Zimbabwe under a franchise agreement with Edcon.

The transaction comes at a time South African media have been awash with reports that Edcon is facing collapse. The company has, however denied the reports, insisting it was working on a turnaround strategy.

Edcon is said to be in talks with the South African State-owned investment arm, Public Investment Corporation, for a possible bailout estimated at R1,2 billion.