Struggling retailer Steinhoff has raised about R5.8bn (€315.2m) after selling some of its shares in its European discount retailer Pepco to cut its debt.
The company, valued at R2.09bn on the JSE, announced on Wednesday that it sold 38-million shares it holds in the retailer via IBEX Retail Investments (formerly Pepco Holdco) by the placement of shares.
“The placement was upsized from its launch size of approximately 34.5-million ordinary shares due to investor demand,” the company said, diluting its stake in the Pepco Group from 78.9% to 72.3%.
Pepco Group, which owns the Pepco and Dealz brands in mainland Europe and Poundland in the UK, generates about half of Steinhoff’s revenue from continuing operations.
It opened 105 new stores — 100 Pepco and five Poundland — during the reporting period as it aims to open 550 new stores in 2023 — 34 more than it did in 2022. The new stores included eight in Greece.
The price of these placement shares — shares offered to a select group of investors — was determined by a bookbuilding process, which involves collecting bids from investors for how many shares they want to buy and what price they are willing to pay to help the company receive the highest price.
Pepco Group will not receive any proceeds from the sale, and is separate from the maturity extension announced in December.
Steinhoff’s share prices plummeted last month after announcing that its main debtholders will take majority control, leaving shareholders with no more than 20% and possibly even nothing.
The group’s debt of about €10bn, which was due in June next year, is held by various lenders and exceeds the value of the group’s assets, according to Steinhoff.
The company said in December it has reached an agreement with 64% of lenders to extend the repayment deadline. The deal will leave shareholders with 20% of the firm while the debtholders will control 80%.
Should shareholders not agree to the debt extension deal, they could lose all of their equity.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.