The South African economy is preparing to emerge from the lockdown with nearly 2 million fewer jobs. Thousands of businesses are not expected to survive the chaotic period.
Here are 7 prominent companies and businesses that are either close to closure, or are not expected to survive the lockdown and the economic turmoil brought on by the coronavirus:
The massively indebted Edcon, the owner of Edgar’s and Jet, which was already embroiled in a brutal battle for survival even before the coronavirus crisis, may have been dealt its killing blow as the National Lockdown initially banned clothing sales.
In March, Grant Pattison, CEO of Edcon told suppliers in a presentation that the company would not be able to settle its bills, and it would soon become impossible to re-open after lockdown. Edcon would file for bankruptcy soon after this.
There were speculations that Mr Price would be interested in purchasing Jet from Edcon, but the retailer has since denied these speculations.
Edcon’s future seems exceedingly dire and uncertain. Last year the company benefitted from a massive R2.7-billion lifeline stemming from banks, landlords and the Public Investment Corporation. Now, its backers will probably not be too keen on providing another massive stimulus.
The company, which opened its first store in 1929, is looking at closure.
2. Associated Media
Business Insider writes that the Magazine Industry has been one of the hardest hit during the pandemic. Now, with massive economic turmoil encircling the country, advertising has been drying up. Some stores in South Africa were also not selling magazines during the lockdown.
Associated Media Publishing, publisher of Cosmopolitan, House & Leisure, Good Housekeeping and Women on Wheels shut down last month. The cause? The wide-reaching and crippling impact of COVID-19. The company was launched in 1982.
3. Phumelela Gaming & Leisure
Founded in 1997 and based at the Turffontein Racecourse in Johannesburg. Phumelela is SA’s largest horse racing business.
It operates four racecourses across the country, as well as more than 200 tote outlets and online sites, as well as telephone-betting centres.
During the lockdown, the company filed for business rescue, but thanks to R100 million in emergency funding from the Oppenheimer family, it may still be stabilised.
4. Pretoria Society of Advocates
Known as the Bar Council, the society has applied for provisional liquidation. The Bar Council was catapulted into dire straits during the nation’s hard lockdown. It is owed in excess of R8.5-million by members and previous members.
“The financial position of the society has been steadily deteriorating over a number of years mainly as a result of economic realities and some members being unable to pay their bar fees,” reads a statement issued by Janett Gildenhuys, chairperson of the Bar Council on May.
5. Time Freight
A courier company, and part of The Laser Group, is no longer operational. The lockdown was responsible for bringing the company to a screeching halt.
“Dear valued customer,” begins a statement on the company’s now-closed website, “Time Freight is not currently operational.”
The owner of Kulula.com and the local operator of British Airways in South Africa also filed for bankruptcy protection during the lockdown.
Across the world, other airlines found themselves in the same position, including Flybe (UK), Trans States Airlines and Compass Airlines (US), Virgin Australia as well as Avianca in Colombia. SAA has been in business rescue since December.
Comair will now require a massive cash injection, and can only hope to survive if it sells half its fleet, according to its business rescue practitioners. In its most optimistic scenario, its planes will only take to the skies in November.
Even as the rest of the country moved into Level 3 on Monday, sit-down meals at restaurants are still not allowed under lockdown. Adding more financial pressures to the incomes and jobs in an industry that employs over 800,000 people.
According to Wendy Alberts, CEO of the Restaurant Association of South Africa (RASA), “dozens of restaurants” are going out of business every day. Most prominent of them is The Kitchen, a hidden gem in Cape Town where Michelle Obama lunched in 2013.
Edited by Luis Monzon
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