Edcon concludes securitisation of further R1 billion of debtors book
10 June 2004
Edgars Consolidated Stores (Edcon) today announced that is has successfully concluded the securitisation of a further R1,1 billion of its debtors’ book.
The securitisation raised a total of R1,1bn of which Edcon acquired an investment of R170 million. The net cash inflow for Edcon was thus R900 million.
Commenting on the conclusion of the deal, Edcon Group Financial Direct Steve Binnie said, “The fact that we were able to complete the successful securitisation of a further portion of our debtors’ book at such favourable rates indicates a high degree of investor confidence in the quality of the book. It is gratifying that the notes were 2,6 times oversubscribed.”
The proceeds from the sale of the debtors’ book will be used to repay debt, leaving Edcon ungeared, as well as to fund current and future expansion of the group. Based on current interest rates and the amount raised, the annual pre-tax interest saving to Edcon would amount to approximately R9m.
On the Cards, the special purpose vehicle that purchased the debtors’ book from Edcon, raised capital in three portions. R800 million was raised in Class A Secured Floating Rate notes, attracting a price of 0,4% above the Johannesburg Inter Bank Acceptance Rate (Jibar), the Class B Secured Floating Rate Notes raised R95 million with a rate of 1,18% above Jibar. On the Cards has also secured a subordinated loan of R170m from Rand Merchant Bank following an indirect collateralised credit linked investment by Edcon of R170m.
Edcon’s expertise in credit management and collection is reflected in the high quality of its debtors’ book, with bad debts for the year to March 2004 running at 5,2% of the debtors’ book and 2,4% of credit transactions. Edcon will continue to manage the debtors acquired by On the Cards.