Orrick Assists in Debt Restructuring of South Africa's Largest Retailer

Orrick assisted GLAS Trust Corporation Limited in the restructuring of the debt of Edcon, South Africa’s largest retailer.

Edcon has been under severe pressure over the past few years. GLAS Trust Corporation Limited became trustee of two Senior Secured Notes of over €1 billion in principal amount issued by Edcon companies in July 2016. The highly complex cross-border restructuring of the capital structure, which closed on February 1, 2017, involved a large number of stakeholders, including South African and international lenders, bondholders and Bain as shareholder; reduced Edcon’s debt burden; and transferred ownership from Bain to a number of hedge fund creditors. Edcon’s operational debt has reduced to approximately R7 billion.

The transaction was novel in a number of ways, including that the compromise was effected under South Africa court procedures and is the largest transaction ever to have used a South African Business Compromise. We also acted for the trustee in the issuance of four series of PIK Notes, which was one element of the restructuring consideration. The restructuring leaves Edcon free to focus on its operational turnaround.

The Orrick team included Stephen Phillips, Scott Morrison and Jack Mead on the restructuring aspects of the deal, and Sushila Nayak on the New York high yield aspects of the deal.