FNB denies it opposed Pepkor rescue of Fashaf.

Posted On Friday, 13 December 2002 10:01 Published by eProp Commercial Property News
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Trade unions criticised First National Bank (FNB) yesterday for opposing Pepkor's purchase of ailing Fashion Africa (Fashaf), which saved 1000 jobs.


Property-Housing-ResidentialFashaf was placed in liquidation on November 1 and its JSE Securities Exchange SA listing was suspended. It was announced yesterday, however, that given Competition Commission approval, the JSE-listed Pepkor would buy Fashaf.

FNB, along with Absa, was one of the major creditors owed cash by the failing Fashaf. However, Absa took the opposite tack in supporting the Pepkor bid.

Liquidators received four bids for Fashaf and FNB head of corporate recoveries Inus du Preez said the bank had not rejected the Pepkor offer, but had 'preferred' a rival bid by Bizz Africa 454. 'However, we gladly accept the Pepcor offer and do not oppose it,' he said.

Despite the decision by lead liquidator Enver Motala to keep Fashaf alive while trying to find a buyer, creditors said FNB had initially wanted to close the business down permanently.

Du Preez disputed this, saying the bank only wanted to shut doors 'temporarily' so that it could 'assess its financial position through a stocktaking'.

'It would be irresponsible of the bank towards its own depositors and shareholders to continue to fund a company with no prospect of returning to financial soundness,' said Du Preez.

Absa director Steve Booysen said in an era of greater corporate social responsibility, banks have a duty to do their utmost to keep companies alive where possible, and preserve jobs.

Oscar Malgas, spokesman for the three unions representing Fashaf workers, accused FNB of thwarting the process and trying to 'force workers into starvation'. However, Malgas praised Absa for its progressive stance as well as Motala for putting the deal together, thus saving jobs.

The unions said it was a historic event that trade unions, nearly all the creditors, banks and the company's management had worked together to give Fashaf a second chance.

Pepkor MD Pieter Erasmus said Fashaf, trading through Dunns and Millers stores, could be turned around within the next year.

Pending competition authority approval, Erasmus said Pepkor planned to nearly double the number of Dunns and Millers outlets in existence from the present 225 to between 350 and 400.

Erasmus said Pepkor would pay a minimum of 45c in the rand, based upon Fashaf's stock levels when the deal was finalised. If the deal were to be approved now, for example, Pepkor would pay nearly R50m, based upon Fashaf's stockholding of more than R100m.

Fashaf CEO Christo Claasen said the proposed takeover would give Fashaf the financial clout it lacked previously, and it would now be able to be really competitive in the discount clothing market.

He said aside from its strong balance sheet, Pepkor would give Fashaf increased buying power, allowing it to buy goods on more favourable terms.

Erasmus said Fashaf's turnover for the year ahead was expected to be at least R500m, but could even be R750m.

'Although we believe Fashaf to have excellent profit potential, its main contribution to the group will be the greater penetration it will give us of our market,' he said.

Last modified on Saturday, 26 April 2014 16:09

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