No to FNB's plan to close Fashaf outlets.

Posted On Tuesday, 19 November 2002 10:01 Published by
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First National Bank (FNB) has called for 227 outlets of clothing retailer Fashaf to be closed immediately.
First National Bank (FNB) has called for 227 outlets of clothing retailer Fashaf to be closed immediately, in a controversial move that would have plunged 1000 employees across the country into unemployment in the festive season.

Fashaf was placed in provisional liquidation on November 1, and now the liquidators maintain that by trading through the high-profit Christmas season, the clothing retailer would be able to realise maximum value for its R250m stockholding.

At a creditors meeting last week, FNB raised the ire of trade creditors, trade unions and Fashaf employees by asking for the Fashaf stores to be closed immediately.

Absa, taking a stance against another bank, joined these parties in rejecting FNB's request.

FNB's call was rejected by the liquidators, and the company will now trade through the Christmas season.

The liquidators requested bids on Sunday from companies looking to buy the 227 stores as a going concern.

The stores include Dunns, Giant Superstores and Millers Shoes. The offer closes on November 22.

Lead provisional liquidator Enver Motala said even if this was unsuccessful, it would provide employees with at least two more months of employment.

'SA has a high unemployment rate, and with companies being liquidated at an alarming rate, thousands of jobs have already been lost. It wouldn't be right to knowingly make this situation worse when we have other options,' he said.

Liquidators said that by trading over Christmas, Fashaf would be able to realise maximum value for its R250m stockholding, given the fact that 25% of annual retail sales take place in the festive season.

Motala said it would make good economic sense to get full value on the stock, which would cover Fashaf's running costs of R20m a month, including a monthly staff bill of R5,5m.

Had FNB got its way, the stock would probably have been auctioned by the liquidators, a process which typically only realises a quarter of the value, which in this case would have been about R62m.

Oscar Malgas, a spokesman for the three unions representing 460 employees, said: 'FNB didn't seem to care about the employees. It's difficult for us to understand why they wanted to do this.'

FNB is owed R25m by Fashaf, Absa is owed R15m and trade creditors are owed a total R110m.

Business Day

Publisher: Business Day
Source: Business Day

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