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CNA: Creditors in the dark as business rescue looms

Retailer has not paid multiple creditors for months.
Troubling outlook for CNA. Image: Waldo Swiegers, Bloomberg

Creditors remain in the dark as CNA battles to avoid business rescue. Reports emerged last week that the stationery retailer is in financial trouble and that the relationship between the board and CEO has soured.

The board is accusing CEO Benjamin Trisk of engaging business rescue practitioners without its consent, according to Business Day. The board is of the view that Trisk acted “unilaterally”. However, Trisk told the paper that, as a director, he had to look after the “welfare of the company, its staff and its creditors”.

He claims that the board discussed business rescue at the end of March.

Still waiting

Moneyweb understands that CNA has not paid multiple creditors for months. One creditor who is known to Moneyweb has still not been paid for January purchases.

A payment plan proposed by the retailer saw terms of 60 days effectively change to 120 days, subject to cash flow.

Last week, CNA contacted creditors to state that the proposed payment plan would be amended further with part payment now likely at the end of the month. The letter stated that the retailer needed time to put funding in place.

This suggests, on the surface at least, that funding is being lined up.

Letting go

Majority shareholder Astoria, which owns 70% of the business, announced on Thursday that it would sell its holding to management (which holds the remaining 30%) for the price it paid. It is unknown whether the ructions at board level contributed to this decision.

Astoria paid R1.2 million for the stake in April 2020 and immediately wrote the value of the stake down to zero. It says it did not provide any “further equity or debt funding” to CNA.

In October, Astoria said that “as expected, August and September were slow trading months for CNA and the business continues to receive much-needed support from landlords and staff”.

“The 2021 back-to-school season will provide a good indication of the prospects of the business,” it added.

Tough going

By March, Astoria confirmed that CNA had been established as a standalone business by the end of 2020 (it had to extricate itself from the Edcon Group). It said “despite having established its own physical infrastructure in the form of a head office and distribution capacity, trading has been difficult.

“As this is the first year of trading as a standalone business, and since a number of categories were discontinued, like-for-like comparisons are difficult to draw. Sales have fallen short of the pre-Covid business plan.”

It added: “Landlords have been extremely helpful under current trading conditions. Paying suppliers in full and on time remains the top priority … [and] it is unlikely that we will have to provide any further capital to the business.”

Looking for funding

At least one supplier has questioned what value Astoria added to the business during its 13-month ownership, especially since it did not put any additional capital into the retailer.

Trading is clearly under pressure with stores not stocked as well as they arguably should be. Some suppliers are no longer providing stock to CNA until payments are received, which could explain the stock situation somewhat.

Unless funding is secured, presumably from a new investor, one could assume that the company will be placed in business rescue.

It is highly unlikely that it will be able to trade its way out of this situation.

Twice burned

Suppliers could end up being burnt twice if CNA does enter business rescue, with most still owed money by Edcon.

Under Edcon’s business rescue plan, concurrent/unsecured creditors are likely to receive only 4 cents in the rand.



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Wonder if anyone will have the nuts to hazard a guess why most of our larger groups have all gone South since ’94 ?

Let me guess!

Is it BEEcause of forced transformation and service went South with it!

Your guess is as good as mine!

How though when it’s still led by a non BEE individual?
It’s simply the nature of the game, people no longer buy hard copy books but rather e-books, competition for stationary suppliers has increased, etc.

@mere I think you’re right! Perhaps one of the very last without empowerment it seems

1 for you 0 for the team

That will teach me to read up first

For me it’s simple. We were a closed economy pre-94. We had no choice but to buy local, so companies had it going good because they were all over our faces forcefully. Now, we don’t give a flyin’ F. If it’s cheaper and meets my standards, I don’t care where it’s from. It’s a subjective world now, we don’t “think” like a collective like it used to be.

Absurd suggestion Duncan, pre-1994 we had a closed economy with highly concentrated industries with uncompetitive companies. There was a time Anglo American (mining) owned FNB(banking) and the old SAB(South African Brewery) owned Edgars(clothing retailer). It’s no surprise that many SA companies can’t stand-up to competition.

Let me hazard a guess to.

It is because this is South Africa. Pun intended.

I do not see a future for a brick and mortar bookstore. This is e-commerce catching up with CNA. Adapt or die.

Another pun. I hazard a guess that CNA sells books about e-commerce. Lol

Even without e-commerce being an issue, I don’t see what CNA brought beyond the brand recognition and access to Edcon’s cross-franchise credit facility.

They had *some* books, *some* stationary, *some* cellphones, *some* PC/console games. All usually cheaper elsewhere. A jack of all trades and master of none.

The last time I ever thought “Oh, I need to go visit a CNA” was to buy a Time Magazine and we all know how well the magazine industry is doing these days.

I think CNA survived in an era of mall shopping where consumers were able to pop in and browse while on their way to other stores. With malls on the decline and e-commerce growing every year, a store like CNA has a very bleak future.

Strange how over the last 27 years the inept keep thinking they can do it and just persist in wrecking anything they touch.

The problem is they still think they can do it, and just move onto the next thing that is working. Like locusts.

A perfect case study for an MBA degree in how to fail. Include OK Bazaars …

Nature of business

50% of the top 100 companies 50 years ago don’t exist today

I see a few politically motivated comments… Which strikes me as odd.

CNA came out of Edcon which was fueled by debt for ages (& ultimately badly run)… Plus they’ve not kept up with the times.

The world has changed and CNA hasn’t. SA context or not, that’s just bad business.

I like your take on this and agree with your comment

End of comments.





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