AutoZone’s business rescue practitioners (BRPs) are confident they have secured an investor requiring the closure of only nine underperforming branches in southern Africa with the loss of 46 jobs, as labour demurs to the plan set for creditors’ approval next week.
In a plan published for creditors’ scrutiny, Matuson and Associates BRPs Piers Marsden and Jenna Osborne said they were confident the plan, which would reward each AutoZone employee with R32 000 in hardship compensation, would gain traction with shareholders, creditors and workers.
“If the sale process is implemented, the BRPs will seek to obtain the sale of the business or the divisions as going concern or through the acquisition of the company’s shares, thereby resulting in many jobs being preserved. Employees who are retrenched, if any, would be in a better position than a liquidation,” the BRPs said.
They said in addition to the offers received for materially the whole of the business, they had also received several non-binding indicative offers for parts of the business, including various stores as well as portions of the associate head office and logistics infrastructure.
“The BRPs will continue to engage with these buyers in the event the transaction as detailed is not successfully concluded. Any transaction contemplated will be subject to the approval of the lender,” they said in reference to a scheduled meeting for September 11 for all parties to consider the proposal.
The Motor Industry Staff Association (MISA) said it would still pursue the case for its 11 members who will ultimately be affected by the proposed business rescue plan.
According to Martlé Keyter, CEO: Operations at MISA, 11 of the affected employees are members of the union. “MISA’s legal department will continue to participate in the process to protect the interest of our members and to keep them informed of any developments,” Keyter said.
According to sources, the BRPs had secured an unnamed investor, which had confirmed that it had put up the required funding to put the southern African parts retailer back on its feet, subject to the cutting off of loss-making outlets.
The decision now rests with AutoZone’s board and creditors, which include Absa Bank, which has a R400 million lien over the group. “It is not a question of closing unprofitable branches here and there. There are people still to be affected by this, and we need to be carefully about taking everyone along. It is still a credible turnaround plan plan because the business is not going into liquidation,” a source said.
AutoZone tottered on the precipice after it underwent a private equity transaction in 2014, funded by a responsible level of debt, but it could not meet expectations due to the country’s challenging economy.
Efforts to address the lack of performance were further impeded by the Covid-19 pandemic, civil unrest, and a period of stagflation during which it faced increasing debt pressures, which could not be helped by debt holidays.
In July, the Gauteng High Court, Johannesburg, granted Absa an order to seize control of the assets of AutoZone due to the company’s inability to settle its outstanding debts, allowing Absa to claim AutoZone’s movable assets under its general notarial bond.The bank, however, held back on moving against the retailer, saying it was confident in the business rescue process.
“Absa is working with the business rescue practitioners in order to achieve a favourable outcome for the relevant stakeholders in this matter,” Absa’s manager for external communications, Naledi Pebane, said.
BUSINESS REPORT