Edcon refinances debt as retailer seeks more shoppers.

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Edcon Holdings has agreed with lenders to a debt refinancing that will see SouthAfrica’s biggest clothes retailer reduce borrowings by R4.5 billion ($313 million), easing the pressure on its balance sheet and enabling the company to pursue a turnaround plan.

The owner of the Edgars and Jet chains agreed to extend the maturity of more than R7.9 billion of bank debt, the Johannesburg-based company said in a statement on Monday. As a result of that and other measures, none of Edcon’s debt will mature for at least two years.

“We won’t have any debt to repay or refinance until Dec. 31, 2017,” Chief Financial Officer Toon Clerckx said by phone. “Our balance sheet is now in good shape. Our cash flows as a result of that will give the business the chance to further turn around.”

Edcon was burdened with debt after being acquired by Bain Capital Partners for about R25 billion in 2007 to tap rising economic growth in Africa’s second-largest economy. That increased 15% to R27 billion in the three months through Sept. 26, Edcon said in a statement earlier this month.

Edcon’s interest repayments due in March and September are unaffected by the deal and will be met, Clerckx said.

Balance Sheet

In June, Edcon asked holders of the company’s 425 million euros ($450 million) of 2019 bonds to take a loss as the company sought to stabilize its balance sheet. Almost all of the bondholders accepted the exchange offer, cutting Edcon’s net- cash interest-payment obligations by about 1 billion rand a year. Edcon concluded the final stage of the exchange offer on Friday, Clerckx said.

Chief Executive Officer Bernie Brookes said on Nov. 19 that the business can’t maintain the level of debt and still invest. Management should be focused more on the customer than repaying borrowings, he said.

Edcon retail sales declined 0.1% in the quarter through September as transactions settled on credit slumped 7.6%. Earnings before interest, taxes and other deductibles rose 3.1% to R501 million.

Yields on Edcon’s March 2018 bonds fell 5 basis points to 34.707%, according to Bloomberg generic pricing. Rates on the securities jumped to a record high 37.56% on Sept. 30.

This article first appeared on Bloomberg News.