The company nominated Piers Michael Marsden and Jenna Lee Osborne from Matuson & Associates as its business rescue practitioners.
AutoZone CEO Dion De Graaff said in a sworn statement as part of the company's business rescue notice that AutoZone is principally involved in the motor spares industry by aftermarket automotive parts and accessories and that its principal activities are the wholesale and retail of its products.
De Graaff said AutoZone underwent a private equity transaction in 2014 funded by a responsible level of debt. However, the retailer did not meet expectations due to the country's challenging economy.
"Efforts to address the lack of performance were further impeded by the Covid-19 pandemic, civil unrest, and a period of stagflation.
"Throughout this period, AutoZone faced increasingly burdensome debt service obligations. By 2021, it became apparent that operations were contracting below break-even levels," De Graaff said.
AutoZone's lender, Absa, introduced quarterly debt service holidays to negate the challenges. However, it was not enough to return to positive leverage for AutoZone.
"The facilities from Absa are set to mature on 30 June 2024. However, with the sales process aimed at recapitalising the business not concluding in a sale, the bank has declined to give another extension," De Graaff said.
When it comes to prospects for recovery in business rescue, De Graaff noted that AutoZone is a strong brand in South Africa with a loyal customer base. "All this inter alia make the company attractive to those in the automotive spares industry and should enhance the company's prospects of being rescued," he said.
AutoZone operates approximately 190 outlets around the country and employs 1,452 people, of which 25% are members of the Numsa trade union and 21% are of the Motor Industry Staff Association.
