Ann Crotty Writer-at-large
Picture: BLOOMBERG/WALDO SWIEGERS
Picture: BLOOMBERG/WALDO SWIEGERS

Steinhoff International Holdings has asked its creditors to give it another 30 days to finalise the details of an agreement that would freeze debt repayments for three years and give management time to restructure the embattled group.

The terms of the so-called lock-up agreement were due to be finalised on October 20 but on Monday the embattled group said it had asked creditors to agree to an extension to November 20. “We have continued to receive significant support from creditors under the lock-up agreement and we remain in positive discussions with them,” said acting CEO Danie van der Merwe in a statement on Monday.

The agreement, which covers an estimated€9.4bn of debt, relates only to debt raised by Steinhoff Finance Holding, Steinhoff Europe AG (SEAG), Stripes US Holdings Incorporated (SUSHI) and Steinhoff International Holdings. The SA operations, primarily Pepkor (formerly Steinhoff Africa Retail) and KAP, are not involved.

Devin Shutte, head of investments at Robert Group, said the request was not too surprising given the need to get everyone on board in a detailed negotiation process.

“Steinhoff doesn’t have any choice, they are heading down a very difficult road and will be keen to ensure there are no attempted asset grabs or liquidations,” said Shutte.

Van der Merwe said significant progress had been made in stabilising the group’s financial position, which was sent into a tailspin in December 2017 when the board informed investors of unspecified accounting irregularities. The sale of the operating companies of Austrian-based Kika-Leiner had been completed and finalisation of the sale of its properties was imminent. Hemisphere International Properties’ debt had been restructured and a new three-year loan facility of about €775m  secured. Steinhoff’s Asia-Pacific operations had been refinanced to October 2020.

In the US, Mattress Firm’s restructuring involved partial voluntary bankruptcy proceedings and the sale of a 49.9% stake for $525m, which will be used to support the restructuring.

Van der Merwe said negotiations about the new agreements were well advanced. “The one-month extension will give us the necessary time to complete that process ahead of any necessary restructuring processes being launched,” he said.

The original agreement released in July allows for a maximum of three extensions to no later than January 15 2019.

crottya@businesslive.co.za