Steinhoff’s shareholders will lose everything if the latest restructuring plan is put into place, with the company saying its board had agreed on a draft plan to enter into an insolvency process with creditors.
The company is effectively bankrupt and has €10bn in debt due in June that it cannot repay.
It had finalised a plan with lenders in December that gave the creditors who are hedge funds 80% of the company in exchange for extending their debt repayment date to June 2026. Shareholders would get 20% of an unlisted company with no guarantee the holding had any value, if they agreed to this plan.
Last week, at Steinhoff’s AGM just more than 60% shareholders voted against the plan.
Now the Steinhoff board has voted to enter a Dutch law restructuring process, referred to as the WHOA.
If the new WHOA plan is agreed to by lenders and the Dutch courts, shareholders will have no financial interest in the company and lose all value of their shares.
Steinhoff will then be dissolved with “no financial compensation to shareholders”.
Steinhoff said: “It is intended that under the WHOA restructuring plan, 100% of the potential economic interests in the post-closing equity of the group will be for the benefit of the individual financial creditors.”
Under the plan, Steinhoff still wants debt to be extended to June 2026 and with two 12-month extension options if it gets the majority of the lenders’ consent. In the three years the assets will be sold off to repay lenders.
These assets include about a 44% stake in Pepkor and about a 75% stake in European discounter Pepco, as well as holdings in a US mattress firm and an Australian retailer.
Steinhoff will release the detailed draft plan on Wednesday. It will be open for consultation over two weeks before being finalised, based on feedback, and voted on by creditors.
Steinhoff said there was no guarantee of creditors or court approval. If approvals fail, creditors will be able to take over the company’s assets in June, and Steinhoff will cease to exist.
But usually lenders want a slower sale of assets to earn more value rather than a rushed sale, which will see lower prices. As part of the plan, one lender will reduce some of its debt from 10.75% interest to 10%.
The restructuring means that the shareholding in Pepkor, which owns Pep and Ackermans, and HiFi Corporation and Pepco, the European discount retailer, would be sold, but this would not affect the sustainability or existence of the underlying companies.
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