How Austrian debt puts Steinhoff's SA assets at risk
Debt of R145bn at the embattled furniture retailer must be restructured, but loans make it difficult to separate entities with value
Steinhoff’s web of intercompany loans was brought to light for the first time on Friday, raising questions about the value of its hitherto prized South African assets.
The embattled furniture retailer, which admitted to accounting irregularities in December 2017, must urgently restructure €9.6bn (R145bn) in external debt held primarily by its Austrian finance companies, Steinhoff Europe and Steinhoff Finance Holding.
This arises as it faces mounting litigation over possible fraud, including a R59bn claim from its former chairman, Christo Wiese.
"The liquidity position of the group’s key finance companies is not sustainable beyond the next few months, absent a solution," Steinhoff said in a presentation to lenders in London.
The group undertook to provide an update on the discussion with lenders by June 29 at the latest, when it issues interim earnings.
However, the extent to which it will manage to restructure debt could be hampered by widespread intercompany loans. These had "muddied the waters", said an analyst who spoke on condition of anonymity. "We are talking about a few billion euros flowing into and out of these two [Austrian] entities, and to other South African companies," he said.
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