Debt swallows Ellerines’ legacy

2014-12-14 15:00

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Ellerines has been a part of people’s lives since 1950 and its furniture still fills many households across southern Africa.

But the furniture chain, which is in business rescue, has closed or cancelled leases on 200 of its 947 stores and its employees face a bleak Christmas. More than 5?800 of its 7?000 workers have lost, or are in the process of losing, their jobs.

Another 580 stores will be closed by the end of February and, at this stage, it seems unlikely the company will be around for much longer.

Ellerines Holdings, the furniture arm of African Bank, was placed in business rescue shortly before African Bank itself was placed under curatorship. While Ellerines itself did not provide credit, it had an exclusive relationship with African Bank, where the bank provided credit facilities to customers to finance the purchase of goods.

Ellerines divisions include Ellerines, Beares, Furniture City, Geen & Richards, Wetherlys and Dial-a-Bed.

Beares was sold to Lewis Stores, saving 360 jobs, and Dial-A-Bed was sold to Coricraft. But there have been no viable offers for the others to date, and their fate hangs in the balance.

Ellerines also has 78 stores in Botswana, Namibia, Lesotho, Zambia and Swaziland, which will be sold.

African Bank bought Ellerines in 2008 and it’s been an uphill battle since. Ellerines’ losses were R1.2?billion in 2013 and R2?billion this year.

The business rescue plan indicated 2?810 out of Ellerines’ 7?060 employees would lose their jobs.

But in fact, Letitia Field, a senior associate at law firm ENSafrica, which is involved in the business rescue proceedings, said 4?690 people applied for voluntary separation agreements, 628 were retrenched and another 506 were in the retrenchment pipeline.

Shoprite said this week it was taking over 217 Ellerines and Wetherlys leases, and pledged not to retrench the 308 employees at these stores.

But she said the remaining employees who had no voluntary service agreements would be retrenched.

The majority union at Ellerines, the SA Commercial, Catering and Allied Workers’ Union, did not respond to questions.

“Certain stores will be trading throughout the festive season to realise as much value as possible,” said Field.

Ellerines owes more than R1?billion to creditors and Field said no creditors have been paid.

Business rescue will continue for another six to eight months.

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