Cabinet on Thursday welcomed the joint efforts aimed at recapitalising South Africa's largest clothing retailer - Edcon.
Edcon which owns Edgars, Jet and CNA is southern Africa's largest non-food retailer and has been in operation for 89 years.
However, in February, the group reported that it was unable to pay its creditors, including landlords.
After intense negotiations, the group announced that binding agreements have been concluded amongst Edcon Limited's existing secured lenders, the Public Investment Corporation (the "PIC") on behalf of its client the Unemployment Insurance Fund (the "UIF") and participating landlords which will result in the implementation of a recapitalisation programme.
This programme includes the contribution of new cash commitments and rent reductions totalling approximately R2.7 billion into the group.
Edcon says the recapitalisation will result in the removal of all of Edcon's interest-bearing debt and introduces a new group structure and set of shareholders.
Cabinet in a statement said in order to conclude an agreement to save Edcon, all parties had to make sacrifices and to work closely together.
"At the heart of efforts to ensure that Edcon stays afloat is the impact on employment. More than 40 000 direct jobs and many more thousands of direct and indirect jobs would have been lost if Edcon had not been recapitalised."
Cabinet went on to call on South Africans to support the call made at the Jobs Summit to buy Proudly South African products and support local industry.