Africa-Press – South-Africa. Retailer Steinhoff has launched a new restructuring plan in a bid to win a three-year debt repayment holiday, which may see its retail shareholders left empty-handed.
Steinhoff has a group debt burden of €10.2 billion (R200 billion) that is due and payable on 30 June. But the furniture group has said there is no way it will be able to settle its debt obligations in the next three months.
Last week at its annual general meeting, Steinhoff attempted to win shareholder approval for a plan to delist and hand 80% of its equity to financial creditors in exchange for a three-year debt repayment extension. But the proposal was voted down by shareholders, with 62% opposed.
A new plan?
The restructuring plan, which Steinhoff will try to get approved by a Dutch court, has many similarities to the plan that shareholders rejected.
The retailer will again argue for an extension of the maturity date of its debt to 30 June 2026, with two 12-month extension options available thereafter. The group is also still proposing to delist from the Frankfurt and Johannesburg Stock exchanges.
In place of publicly traded shares, creditors will be granted contingent value rights, which Steinhoff head Louis Du Preez previously described as “contractual rights issued by new top holding company”.
But unlike the proposal put before shareholders last week, the new restructure does not foresee the company’s current shareholders having a stake in the new entity.
On Tuesday, Steinhoff said in an update to shareholders:
The announcement states that retail investors will not get paid out for their shares, which were still trading at 27 cents a share at the close of business on Tuesday.
“The expectation is that following implementation of the Maturity Extension Transaction, a proposal will be made to the shareholders of the company to dissolve and liquidate [Steinhoff’s parent company] which, if approved, will result in the existing [Steinhoff] shares including their current listings falling away with no financial compensation payable to shareholders.”
‘Prevent this robbery’
The Schutzgemeinschaft der Kapitalanleger (SdK), a large German investor group, has already vowed to oppose the restructuring.
“Our war chest for lawyers’ fees is filled to the brim,” a representative told the AGM last week. “We will prevent this robbery from happening – you have my word.”
Steinhoff said its new plan needs the consent of financial creditors and confirmation by a Dutch Court to proceed. And it’s already raising the possibility that it may fail.
“There is no certainty that such consents or confirmation order will be achieved before the current maturity date under the group services debt of 30 June 2023,” it said.
If it fails the group’s creditors may “enforce their rights,” – meaning the company will be placed into liquidation.
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