Steinhoff creditor groups join forces ahead of a potential debt restructuring
Some holders of the European unit’s bond hire advisers ahead of a creditors at meeting on Friday; Steinhoff raised R7.1bn from a sale of stake in PSG Group on Monday
Frankfurt — More Steinhoff creditor groups are joining forces to position themselves for a potential debt restructuring at the furniture retailer, people close to the matter said, before the company meets creditors on Friday.
Steinhoff, owner of more than 40 retail brands including Poundland in Britain, admitted "accounting irregularities" last month, triggering an 85% share slide.
Some holders of an €800m bond of a European Steinhoff unit have mandated restructuring adviser PJT as well as law firm Latham & Watkins to represent them in any debt restructuring talks, the sources said.
Earlier, convertible bond holders had hired Houlihan Lokey and law firm Kirkland & Ellis to help them deal with the matter, while senior debt holders mandated FTI and Allen & Overy.
Roughly €2bn of Steinhoff’s €10.7bn in debts mature this year.
The company has called a meeting with some of its European-based creditors in London on Friday.
As part of efforts to stabilise the company, on Monday, Steinhoff sold a stake in investment firm PSG Group for R7.1bn. Last week it secured €60m from South African lenders.
It remained unclear whether Steinhoff will use the money from the PSG sale to plug funding needs at the European operating level, especially at Austria’s Kika-Leiner. Steinhoff’s management is currently in talks with European subsidiaries about funding needs, one source said.
It also remained unclear if the group is still in talks on raising €140m from South African banks following the PSG sale. Steinhoff viewed terms offered by international lenders as unattractive, another person said.
While the creditors hope for an update at Friday’s meeting on how Steinhoff hopes to resolve its debt situation, any negotiations about a credit valuation adjustment can only begin once Steinhoff has restated its figures and it becomes clear what future earnings the group will have.
"We expect that to be the case in April," one of the sources said.
Steinhoff has rushed to fill a liquidity gap to avoid a small unit, such as Austria’s Kika-Leiner — which needs about €80m of fresh money — from pulling down the entire group.
While the PSG stake sale helped avoid the collapse of the Steinhoff group, it also lowers available collateral securities that could help repay other creditors.
PJT and Latham declined to comment, while Steinhoff was not immediately available for comment.