Failed Abil's furniture arm gets potential $36 mln offer for Africa business

by Reuters 0

Its administrator said on Monday, as the company is wound down to repay creditors.

Ellerine’s creditors also on Monday voted for a “business rescue plan” over immediate liquidation, giving administrators more time to sell off assets.

(READ MORE: UPDATE: Abil’s Ellerine says it owes South African banks $53 mln)

The furniture retailer was forced into business rescue – similar to Chapter 11 bankruptcy in the United States – in August after parent company African Bank Investments (Abil) cut off funding. Days later Abil was rescued by the central bank.

The administrators in charge of Ellerine had received the 400 million rand indicative offer from a listed South African company for its business outside South Africa, Leslie Matuson, who is leading the rescue plan, said.

“That business is viable,” Matuson said. Its Africa business has nearly 80 stores across Namibia,Botswana, Zambia, Lesotho and Swaziland.

“That R400 million is what we anticipate realising, is the amount of the indicative offer for the rest of Africa.”

(READ MORE: ABIL to transfer core lending assets to the “Good Bank”)

Under the restructuring, unsecured creditors will receive as much 30 cents for every rand owed. Liquidation would have left them with up to 13 cents on the rand, according to the administrators’ estimates.

Ellerine is in advanced talks to sell two of its brands to other furniture retailers. It is also in talks with other retailers who may assume the leases of some existing Ellerine outlets, a move that could save some of the roughly 6,000 jobs at stake, Matuson said.

The company owes its creditors, including South Africa’s big banks, almost 1.3 billion rand, reflecting the extent to which Abil’s failure has rippled across corporate South Africa.

Abil bought Ellerine in 2008 in an ultimately disastrous attempt to sell furniture on credit.