COMPANY NEWS IN BRIEF
West Pack Lifestyle enters business rescue
West Pack Lifestyle, one of South Africa’s leading retail brands, has voluntarily initiated business rescue proceedings.
Matuson Associates announced that, on May 9, 2024, West Pack’s board resolved to enter into voluntary business rescue proceedings, and has nominated Grant Chittenden, Jenna Osborne and Lance Schapiro to be its joint business rescue practitioners.
These proceedings were officially filed with the Companies and Intellectual Property Commission on May 15, 2024, and took immediate effect.
“The board has recognised that the Company is financially distressed... specifically in that the Company is unable to pay its debts as they become due and payable now and within the succeeding 6 months,” wrote CEO Jose Da Silva said in a sworn statement kick-starting the process.
West Pack, which has 52 stores across South Africa, Lesotho, eSwatini, and Namibia, employs 924 people, and the business rescue proceedings aim to save the company and these jobs.
The numerous companies under West Pack include; West Pack Lifestyle, West Pack Lifestyle Distribution Centre, West Pack Franchise, Petzone, Petzone Franchise, Café Estreito, Café Estreito Franchise, and Beija Flor Investments.
West Pack explained that it landed in financial trouble because of its accelerated growth path, which strained its cash flows.
It said the high capital cost of opening stores and the increased inventory mix depleted the company’s cash and ability to repay debt, while unsold inventory increased because of incorrect stocks and product mix.
The company said that working capital constraints prevented it from buying the right products to fix its product mix.
Additionally, West Pack said that South Africa’s struggling economy and load-shedding caused further hardship.
These abovementioned factors are cited as key contributors to the retailer’s turnover to steadily decline over the last few months, not meet its budgeted revenue.
It resulted in West Pack trading at a loss, which has “put considerable pressure” on its cash reserves.
-BUSINESSTECH-
700 Mercedes jobs at risk in South Africa
700 Mercedes jobs at risk in South Africa
Mercedes-Benz South Africa Limited (MBSA) has decided to enter a consultation process regarding the restructuring of its manufacturing operations, which could impact 700 jobs at its East London Manufacturing Plant.
This comes as the company is restructuring its manufacturing operations, transitioning from the current 3-shift model to a 2-shift model.
“In recent years, the automotive industry has contended with several challenges which have also impacted MBSA and its suppliers,” said MBSA in an announcement released on 13 June.
Challenges listed include “deteriorating macroeconomic conditions and prolonged port challenges.”
“Overall consumer sentiment has suffered as a result of fluctuations in the exchange rate, subdued household income, rising fuel prices as well as increased energy and logistics costs,” the company added.
The company said it had implemented various measures to try to address and improve the performance of their manufacturing operations, including cost-saving initiatives and efficiency improvements.
“However, despite our best efforts, the current operating environment remains challenging, necessitating further action to ensure the long-term sustainability of our manufacturing operations,” it said.
The company said that it is entering a consultation process in accordance with Section 189(3) of the Labour Relations Act (LRA).
This part of the LRA requires employers to disclose in writing to the employees or their unions all relevant information including the reasons for the Retrenchment, alternatives to dismissal that were considered, and the reasons why they were rejected.
Subject to the outcome of the consultation process, the company estimates that approximately 700 employees at the East London Manufacturing Plant could potentially be affected by these retrenchments and the transition from a 3-shift to a 2-shift operating model.
“The Section 189 consultation process could see the number of employees retrenched though the implementation of early retirement, voluntary severance, and natural attrition measures,” said MBSA.
-BUSINESSTECH-
Visa, Mastercard $30 billion fee settlement in peril
Visa's and Mastercard's proposed $30 billion antitrust settlement to limit credit and debit card fees for merchants is in peril, after a New York judge signaled she was preparing to reject the accord.
U.S. District Judge Margo Brodie in Brooklyn told lawyers for the card networks and objectors at a hearing on Thursday that she will "likely not approve the settlement," according to court records.
She plans to write an opinion explaining her decision and reasoning.
Both card networks said they were disappointed. Mastercard called the settlement a "fair resolution" that gave businesses more flexibility in managing card transactions, and Visa called it an "appropriate resolution" to the nearly 19-year-old case.
The settlement announced on March 26 was intended to resolve most claims in the nationwide litigation, with small businesses comprising more than 90% of the settling merchants.
Businesses have long complained that Visa and Mastercard charge excessive swipe fees, or interchange fees, for processing credit and debt card payments, and illegally bar them from steering customers toward cheaper forms of payment.
Swipe fees totaled $172 billion, opens new tab in 2023, and have more than doubled in the last decade, according to the Merchants Payments Coalition, which represents retailers, grocers, convenience stores and gas stations.
Under the settlement, the average 1.5% to 3.5% swipe fee would fall by at least 0.04 percentage points for three years. Visa and Mastercard also agreed to cap rates for five years and remove anti-steering provisions.
Objectors included the National Retail Federation, the world's largest retailer trade group.
It called the settlement "manifestly insufficient" and its benefits "meager and temporary," saying it would still let Visa and Mastercard dictate swipe fees, and impose a "virtually limitless" ban on future claims by merchants.
West Pack Lifestyle, one of South Africa’s leading retail brands, has voluntarily initiated business rescue proceedings.
Matuson Associates announced that, on May 9, 2024, West Pack’s board resolved to enter into voluntary business rescue proceedings, and has nominated Grant Chittenden, Jenna Osborne and Lance Schapiro to be its joint business rescue practitioners.
These proceedings were officially filed with the Companies and Intellectual Property Commission on May 15, 2024, and took immediate effect.
“The board has recognised that the Company is financially distressed... specifically in that the Company is unable to pay its debts as they become due and payable now and within the succeeding 6 months,” wrote CEO Jose Da Silva said in a sworn statement kick-starting the process.
West Pack, which has 52 stores across South Africa, Lesotho, eSwatini, and Namibia, employs 924 people, and the business rescue proceedings aim to save the company and these jobs.
The numerous companies under West Pack include; West Pack Lifestyle, West Pack Lifestyle Distribution Centre, West Pack Franchise, Petzone, Petzone Franchise, Café Estreito, Café Estreito Franchise, and Beija Flor Investments.
West Pack explained that it landed in financial trouble because of its accelerated growth path, which strained its cash flows.
It said the high capital cost of opening stores and the increased inventory mix depleted the company’s cash and ability to repay debt, while unsold inventory increased because of incorrect stocks and product mix.
The company said that working capital constraints prevented it from buying the right products to fix its product mix.
Additionally, West Pack said that South Africa’s struggling economy and load-shedding caused further hardship.
These abovementioned factors are cited as key contributors to the retailer’s turnover to steadily decline over the last few months, not meet its budgeted revenue.
It resulted in West Pack trading at a loss, which has “put considerable pressure” on its cash reserves.
-BUSINESSTECH-
700 Mercedes jobs at risk in South Africa
700 Mercedes jobs at risk in South Africa
Mercedes-Benz South Africa Limited (MBSA) has decided to enter a consultation process regarding the restructuring of its manufacturing operations, which could impact 700 jobs at its East London Manufacturing Plant.
This comes as the company is restructuring its manufacturing operations, transitioning from the current 3-shift model to a 2-shift model.
“In recent years, the automotive industry has contended with several challenges which have also impacted MBSA and its suppliers,” said MBSA in an announcement released on 13 June.
Challenges listed include “deteriorating macroeconomic conditions and prolonged port challenges.”
“Overall consumer sentiment has suffered as a result of fluctuations in the exchange rate, subdued household income, rising fuel prices as well as increased energy and logistics costs,” the company added.
The company said it had implemented various measures to try to address and improve the performance of their manufacturing operations, including cost-saving initiatives and efficiency improvements.
“However, despite our best efforts, the current operating environment remains challenging, necessitating further action to ensure the long-term sustainability of our manufacturing operations,” it said.
The company said that it is entering a consultation process in accordance with Section 189(3) of the Labour Relations Act (LRA).
This part of the LRA requires employers to disclose in writing to the employees or their unions all relevant information including the reasons for the Retrenchment, alternatives to dismissal that were considered, and the reasons why they were rejected.
Subject to the outcome of the consultation process, the company estimates that approximately 700 employees at the East London Manufacturing Plant could potentially be affected by these retrenchments and the transition from a 3-shift to a 2-shift operating model.
“The Section 189 consultation process could see the number of employees retrenched though the implementation of early retirement, voluntary severance, and natural attrition measures,” said MBSA.
-BUSINESSTECH-
Visa, Mastercard $30 billion fee settlement in peril
Visa's and Mastercard's proposed $30 billion antitrust settlement to limit credit and debit card fees for merchants is in peril, after a New York judge signaled she was preparing to reject the accord.
U.S. District Judge Margo Brodie in Brooklyn told lawyers for the card networks and objectors at a hearing on Thursday that she will "likely not approve the settlement," according to court records.
She plans to write an opinion explaining her decision and reasoning.
Both card networks said they were disappointed. Mastercard called the settlement a "fair resolution" that gave businesses more flexibility in managing card transactions, and Visa called it an "appropriate resolution" to the nearly 19-year-old case.
The settlement announced on March 26 was intended to resolve most claims in the nationwide litigation, with small businesses comprising more than 90% of the settling merchants.
Businesses have long complained that Visa and Mastercard charge excessive swipe fees, or interchange fees, for processing credit and debt card payments, and illegally bar them from steering customers toward cheaper forms of payment.
Swipe fees totaled $172 billion, opens new tab in 2023, and have more than doubled in the last decade, according to the Merchants Payments Coalition, which represents retailers, grocers, convenience stores and gas stations.
Under the settlement, the average 1.5% to 3.5% swipe fee would fall by at least 0.04 percentage points for three years. Visa and Mastercard also agreed to cap rates for five years and remove anti-steering provisions.
Objectors included the National Retail Federation, the world's largest retailer trade group.
It called the settlement "manifestly insufficient" and its benefits "meager and temporary," saying it would still let Visa and Mastercard dictate swipe fees, and impose a "virtually limitless" ban on future claims by merchants.
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