July 20, 2018 / 9:42 AM / 5 months ago

UPDATE 1-Steinhoff's creditors support debt lock-up, key to saving retailer

(Adds Hemisphere lock-up, gives detail)

JOHANNESBURG, July 20 (Reuters) - Steinhoff’s creditors have agreed to hold on their debt claims for three years, the embattled retailer said on Friday, throwing a lifeline for the South African retailer caught in the throes of an accounting scandal.

The parties will now seek to implement the restructuring within three months, the retailer, which has more than 40 retail brands including Conforama, Poundland and Mattress Firm, said.

Steinhoff’s shares initially rose 3 percent in response to the news, but later pared its gains to trade down 1.69 percent at 3.50 rand by 0939 GMT.

It is fighting for survival after revealing multi-billion euro holes in its balance sheet that wiped more than 90 percent off its market value and forced it to sell assets to fund working capital.

The agreement would give the firm’s subsidiaries three years breathing space without debt repayments, paving the way for the company to restructure 9.4 billion euros ($11 billion) of debt.

Under the terms of the restructuring deal, the company’s external debt would be restated at par and be given a common maturity date of three years from the completion of the restructuring agreement, it said in a statement.

The crisis-hit retailer also said on Friday it had received 91 percent approval from its Hemisphere lenders.

Hemisphere portfolio, which holds about 140 property assets, include stores, warehouses and offices across Austria, Germany, the Netherlands, Switzerland, Britain and eastern Europe.

Steinhoff said it would now negotiate the terms of the Hemisphere lock-up agreement with the lenders.

In April a real estate specialist cut the valuation of the property portfolio to 1.1 billion euros from Steinhoff’s value of 2.2 billion euros. (Reporting by Nqobile Dludla and Tanisha Heiberg Editing by James Macharia)

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