JOHANNESBURG (Reuters) - Steinhoff (SNHJ.J) (SNHG.DE) said on Thursday that around 90 percent of creditors for several subsidiaries supported an agreement to hold off debt claims for three years, an important step in restructuring the scandal-hit South African retailer.
Steinhoff 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.
Steinhoff said investors holding 89 percent of the debt of Steinhoff Europe AG (SEAG) and 89 percent of the debt of Stripes U.S. Holding Incorporated had given initial consent to a so-called “lock-up agreement”, which is still being finalised.
Between 92 and 99 percent of investors holding bonds issued by Steinhoff Finance Holding GmbH (SFH) had also given their support to the lock-up, the company said in a statement.
Steinhoff’s Johannesburg-listed shares jumped 26 percent on Thursday’s announcement, which followed the expiry of an “early bird fee” deadline on Wednesday for creditors to get preferential terms in the lock-up agreement.
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 ($10.9 billion) of debt.
It would also help the crisis-hit company tackle litigation that includes a 59 billion rand ($4.4 billion) lawsuit brought by former chairman Christo Wiese and class action from a Dutch shareholder rights group called VEB.
“It’s very positive. The main concern is still whether the subsidiaries are going to make enough cash to repay a dividend to the main head office which will in turn be used to pay down the interest over time,” said Cassie Treurnicht, a portfolio manager at Gryphon Asset Management.
Steinhoff, which has more than 40 retail brands including Conforama, Poundland and Mattress Firm, has agreed the main terms of a restructuring deal, under which all its debt would be restated at par and be given a common maturity date of three years from the completion of the restructuring agreement.
The company needed at least 75 percent of creditors of its subsidiaries to sign up to the lock-up agreement by a final deadline on Friday.
The company said previously that it would begin restructuring its debt within three months of the deadline.
Steinhoff said in a separate statement on Thursday it had finalised terms to restructure its Hemisphere portfolio, which holds about 140 property assets. The proposal will now be passed to Hemisphere’s lenders for their approval and the third-party creditors of SEAG and SFH for a lock up agreement.
In April a real estate specialist cut the valuation of the portfolio to 1.1 billion euros from Steinhoff’s value of 2.2 billion euros.
Additional reporting by Tiisetso Motsoeneng; Editing by Jason Neely and Edmund Blair