SPAR to restructure R10 billion debt

SPAR’s new chief executive officer is in talks with banks to restructure its debt and expects the troubled retailer to no longer be at risk of breaching its covenants by next September. 

The discussions centre on the South African company’s R10 billion debt, most of it in euros and due by the middle of next year.

“The European banks have been very supportive,” CEO Angelo Swartz said in an interview on Thursday. 

Swartz took over in October with a mandate to strengthen the retailer after top executives resigned over governance issues.

His comments sparked optimism about the company’s prospects, sending the shares up as much as 6.3% to the highest level in six months. 

Efforts to improve the capital structure come as Swartz works with some new directors to regain market share in South Africa. There are no plans to raise any capital from shareholders, he said.

The company halted its dividend and reported a 47% drop in full-year operating profit on Thursday. 

SPAR supports a network of independent retailers who trade under its brand through its warehousing and distribution business. Recent struggles include the bungling of the implementation of a 1.8 billion-rand software system. 

The loss-making Polish unit has several interested buyers, and SPAR expects to have exited that business by the end of September. 

In South Africa, where SPAR gets the bulk of its revenue, Swartz is “very confident” in the current management team and believes they “have their eye back on the ball.”