AutoZone’s beleaguered business rescue practitioners (BRPs) have confirmed that they are engaging in productive negotiations with potential franchise buyers, necessitating the second postponement of the rescue plan until early September.
According to Matuson & Associates BRPs, the most recent postponement of the business rescue plan’s publication was made so that identified potential investors could conduct due diligence on the company, which is approximately R300 million in the red with Absa Bank.
According to Lance Schapiro, a partner at Matuson & Associates, the law firm could confirm that the engagement with potential investors delayed the publication of the business rescue plan.
“In order to allow potential investors to conduct due diligence, the publication date of the business rescue plan has been extended to September 2. At this point, we are unable to discuss that further,” Schapiro stated.
This is in light of the fact that the legal department of the Motor Industry Staff Association (MISA) stated that it was keeping an eye on the progress of ongoing negotiations.
“AutoZone has sufficient trading cash flow to continue meeting its committed financial obligations while the process is being completed. MISA stays resolved to investigate every possibility to forestall any adverse consequence on workers,” said Martlé Keyter, MISA Chief.
MISA declared that it would continue to participate in the process to safeguard its members’ interests and inform them of any developments.
In response to Business Report, Absa confirmed that it had faith in the procedure and would not implement the attachment order it had obtained in late July, following the process’s initiation declaration.
According to the bank’s statement from yesterday, “Absa is comfortable with the business rescue extension and continues to support AutoZone and the business rescue practitioners toward achieving a constructive solution.”
After reaching a deadlock with Absa, AutoZone’s credit provider, the company voluntarily entered business rescue proceedings, citing years of debt repayment difficulties, particularly during the Covid-19 pandemic.
Absa decided not to extend any more debts at the beginning of July.
Around Southern Africa, including Botswana, Namibia, and Swaziland, AutoZone currently has 33 member-owned franchise branches and 214 wholly owned retail branches. Ethos and AutoZone Management own the business.
BRPs, Wharfs Masden and Jenna Osborne, have advised leasers the show definite their activities to settle the business and their perspective on whether AutoZone can get by in its ongoing structure.
They stated, “The BRPs are of the opinion that, in spite of the unavoidable risks and challenges, there is a reasonable prospect of rescuing AutoZone Holdings.”
However, this is contingent on the availability of funding, the fundamental quality of the company following the BRPs’ evaluation, and the possibility of investment or complete acquisition.
According to Marsden and Osborne, they have effectively taken control of AutoZone while closely collaborating with the executive management.
Creditors were informed by the BRPs that they had initiated talks with a number of parties who had expressed an interest in acquiring AutoZone.
As a result, it became more likely that the business would be sold, with the proceeds being used to pay off its debts.
“We accept that the business salvage cycle will give a sensible possibility in accomplishing an improved result for all partners than a prompt liquidation.”
This comes after Cross Trainer, a well-known retailer of sports equipment, became the latest well-known business to enter business rescue last week. The games retailer has confronted income issues coming from the Coronavirus pandemic, and has battled to stay aware of its functional expenses.
AutoZone business rescue plan publication on hold:
The deadline for publishing AutoZone’s business rescue plan, which was originally scheduled for August 5, has been extended to later this month.
This was confirmed by Absa Bank, which has obtained an order to attach AutoZone’s assets, and the trade union Motor Industry Staff Association (Misa), which registered interest in the process late.
A spokesperson for Absa stated, “Absa is comfortable with the business rescue extension and continues to support AutoZone and the business rescue practitioners in achieving a constructive solution.”
The business rescue specialists at Matuson and Associates informed creditors at their meeting in July that they had begun discussions with a number of parties who had expressed an interest in acquiring AutoZone.
As a result, it became more likely that the business would be sold, with the proceeds being used to pay off its debts.
AutoZone’s designated business rescue practitioner, Piers Marsden, stated, “We believe that the business rescue process will provide a reasonable prospect of achieving a better outcome for all stakeholders than an immediate liquidation.”
AutoZone is the largest privately held retailer and wholesaler of automotive parts in Southern Africa, with locations in Botswana, Namibia, South Africa, and Swaziland. It had 33 franchised and 214 company-owned retail locations before entering business rescue.
Marsden and Osborne claimed to have effectively taken control of AutoZone through close collaboration with the company’s top executives.
