Steinhoff weighs its next move after Andreas Seifert bombshell
The implementation of the company voluntary arrangement will now be delayed until the application brought by German entity associated with Seifert is resolved
Embattled furniture retailer Steinhoff is facing a new challenge to its attempts to strengthen its balance sheet, with former business partner Andreas Seifert opposing an agreement reached with creditors in December.
The deal, referred to as a company voluntary arrangement (CVA), was reached with and approved by an overwhelming majority of creditors in December and two Steinhoff subsidiaries, Steinhoff Europe AG (SEAG), and Steinhoff Finance Holding Gmbh (SFHG).
The implementation of the CVA would now be delayed until the application brought by LSW, a German entity associated with Seifert, had been resolved, Steinhoff said in a statement on Friday.
CVAs allow financially distressed businesses to come to an agreement under UK law with creditors, often by negotiating more favourable lease agreements and allowing some outlets to close before leases expire.
Markus Jooste, Steinhoff’s former CEO, told MPs in September 2018 that the group’s near-collapse had originated from a protracted dispute with Seifert.
The legal battle, mainly over the valuation and ownership of German furniture chain Poco, led to investigations by European regulators and tax authorities that attracted the attention of Steinhoff’s auditors at Deloitte.
Jooste resigned in December 2017 after Steinhoff’s board
disagreed with his plan to replace the auditors and publish unaudited financial results.
His resignation, along with an acknowledgment of accounting irregularities, triggered a collapse in Steinhoff’s share price, wiping more than R200bn off the company’s market value in what has become SA’s biggest corporate scandal.
On Friday, Steinhoff told Business Day the CVA still stood, together with the moratorium on creditor action.
"We and our advisers need to review the substance to the challenge and assess the next steps and likely timing implications. We will press to have the matter resolved as soon as
possible," it said.
Attempts to reach LSW for comment were unsuccessful.
Seifert is also still embroiled in litigation with Steinhoff on other issues. He is suing two Steinhoff subsidiaries, AIH Investment Holding AG and SEAG, for €249m plus interest and costs.
This is in respect of an outstanding portion of a €300m loan advanced by Seifert in 2011. Steinhoff is opposing this claim, and the dispute is ongoing in the Austrian courts.
Steinhoff’s SEAG and SFHG acted as treasuries to the wider group, raising debt from external lenders and placing surplus cash from group companies to fund ongoing borrowing requirements.
The two companies collectively hold most of the debt borrowed by the group, which is well above €10bn, according to the most recent court filings.
Steinhoff’s market capitalisation was €467.6m at the market close on Friday.
It was these subsidiaries which became insolvent following developments in December 2017, which prompted the company to seek relief from creditors through an orderly restructuring process. With Bloomberg