Ann Crotty Writer-at-large

Steinhoff International’s plan to redeem R7.6bn of its rand-denominated bonds that trade on the JSE has fallen R500m short as holders of one block of notes voted against an early redemption resolution.

On Wednesday the company announced that 99.65% of holders of 11 of the medium-term notes issued under the Steinhoff Services R15bn programme voted in favour of early redemption. The programme comprised 12 issues, of which maturities varied from April 2018 to November 2022.

However, 54.55% of holders of the 12th issue, the SHS34 notes, voted against the early redemption resolution. Those notes had a maturity date of November 2022.

Steinhoff initially informed shareholders in January that it was considering an early redemption. Analysts said the move was designed to release the company from restrictions on its ability to sell off attractive South African assets.

The move is also expected to enable Steinhoff Africa Retail to issue its own bonds. The credit rating on Steinhoff’s bonds was cut to junk by Moody’s ratings agency after the shock December 5 announcement that the management was looking into accounting irregularities.

The South African bonds have held up significantly better than Steinhoff’s international bonds, which were trading as low as 20c-30c to the euro.

Ahead of the initial shareholder announcement in January the South African notes were trading around 80c-90c in the rand. The relative strength reflected the fact the bonds were backed by a relatively strong South African balance sheet that includes holdings in PSG, Steinhoff African Retail and Investec Private Equity.

Steinhoff announced in January it had sold 29.5-million of its PSG shares for R7.1bn. It is expected to use the proceeds to fund the early redemption.