Pepkor acts on credit worries

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The Independent Online
ARNOLD LOUW, vice-chairman of Pepkor, the South African company seeking to take control of Brown & Jackson, moved to allay the fears of the group's creditors this weekend.

Brown & Jackson, the troubled owner of the Poundstretcher chain, is seeking a capital injection from either Pepkor or Gerald and Vera Weisfeld. Its creditors are owed around pounds 20m.

Some suppliers, according to trade sources, are threatening to withhold goods until they have been paid, while others are prepared to supply the group only up to the limit of their credit insurance.

Brown & Jackson is believed to have recorded losses of between pounds 6m and pounds 9m in the first quarter of the year.

'If our proposals are voted through we will need a period in which to investigate the real position of the company,' said Mr Louw. 'But we will come to terms with the creditors.'

The group managing director, Tony Haughton, said: 'A business like ours needs suppliers. There is no way that we can afford to antagonise any of them. If we did, we would be dead in the water.'

Pepkor, which already runs a chain of stores in Scotland called Your More Store, has proposed to inject around pounds 20m into the group. Most of this will be secured on Brown & Jackson's assets or on the back of future supply agreements.

Mr Louw and Mr Houghton say they see the latest deal as a way to expand their store network in the UK and Europe. But first they have to have their proposals accepted by Brown & Jackson shareholders, who vote towards the end of the month on the counter-proposals from the Weisfelds.

Most analysts think that the Weisfeld proposals, which involve an initial injection of only pounds 6m, will fail unless they are improved. The Weisfelds, who are on a weekend break in the South of France, have left the matter with their advisers. They are said to be considering a number of options, which are expected to become clearer next week.

Meanwhile Mr Louw elaborated on Pepkor's relationship with Philip Green, the discount retailer who used to run Amber Day and who now runs a private group called Xception. 'We know him and we regard him as a good retailer,' said Mr Louw, 'but there is no room in this deal for anybody else. This is our game.'

Mr Louw said that should Pepkor's proposals be accepted, the company will work, at least initially, with the existing management.

'We'll start the game together and see whether we can live in the same camp. We recently invited the management to South Africa and when they got there they said it had opened their eyes.'

(Photograph omitted)

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