CNA short of cash and warring with CEO

After just over a year, the relationship between the board of CNA and its boss has turned sour as the more than centuryold stationery retailer trawls its coffers for cash to pay creditors and its top shareholder bails out.

CNA procurement manager and board member Olinka Nell said the board is accusing CEO Benjamin Trisk, who took over in February 2020, of approaching business rescue practitioners without the board’s consent. She also confirmed Business Day’s reporting that the company is in financial trouble.

The company is behind in paying landlords and suppliers.

CNA, which sells gift cards, stationery and books from more than 160 outlets across the country, is seeking legal advice over what it said was a unilateral decision by Trisk to reach out to turnaround specialists about placing the company into business rescue, which is a process designed to save a company in financial difficulty and keep creditors from forcing it to pay its debt while practitioners draw up a plan to save it.

Trisk fired back, saying that as a director he was obliged to

look after the welfare of the company, its staff and its creditors. He called the CNA claims that he acted unilaterally “absolute rubbish”.

“I have a fiduciary duty to the company in circumstances when the company is in financial distress. To say I acted unilaterally is [to say] I should ignore my responsibilities as a director,” he told Business Day.

Separately, Astoria, an investment company headquartered in Mauritius, said on Wednesday it had sold its entire 70% stake in CNA to the management team for R1.2m — the same amount it spent when it took over the company.

CNA was part of Edcon, the former owner of Edgars and Jet, and was sold to Astoria as well as Trisk, a former CEO of Exclusive Books, and the management team that included Nell, in February 2020. That was a month before SA imposed one of the world’s harshest lockdowns, which triggered a fight for survival for companies with weak balance sheets.

BAD TIMING

Two days before Astoria — which is partly owned by RECM, a Cape Town-based investment house with a track record of buying undervalued companies — announced it was exiting its stake, CNA wrote to creditors asking for “patience” for money owed, according to a letter obtained by Business Day. The letter said the retailer cannot commit to when creditors or suppliers will be paid.

Nell confirmed that CNA is working on payment arrangements with landlords and suppliers. “We are in talks with creditors about coming to arrangements to pay.”

The timing of the sale of CNA from Edcon to the consortium was unfortunate as it took place a month before the pandemic hit SA. In the past year malls have had far lower foot traffic as consumers shop closer to home and avoid public spaces to avoid contracting the coronavirus.

CNA is also facing strong competition from retailers Game, Shoprite and Checkers, which sell stationery, and from privately owned PNA, which sells similar gifting, craft and art products.

Trisk, who was loved by SA’s publishing community for improving the availability of local books at Exclusive Books, is no stranger to controversy.

He left the book chain in 2018 under a cloud after running up more than R1.6m in credit card, personal and unauthorised personal expenses, it emerged in court documents.

He later engaged in a legal battle with Exclusive Books over its refusal to help him obtain tax clearance. He lost the case.

The March court judgment details how Trisk was suspended on full pay while facing a disciplinary hearing due to his unauthorised expenditure and debt to the firm. Exclusive Books told the court Trisk was paid a golden handshake of R2.4m to facilitate a speedy exit and avoid public controversy.

In the court papers, Exclusive Books also accuses Trisk of acting unilaterally. He was facing disciplinary charges for interfering in the running of coffee shops and in-store restaurants, after he had been told by the company CFO that they did not fall under his authority.