Indebted retail holding company Steinhoff published its restructuring plan late on Wednesday, which will allow it to embark on a slow sale of assets to get the best value for them rather than declare bankruptcy.
The plan, a form of restructuring that includes delisting, will need to be made an order of the court and is similar to what was proposed in December and rejected by shareholders.
After shareholders voted against its first restructuring plan at the annual general meeting in March, Steinhoff announced it would embark on a Dutch insolvency process known as WHOA (Court Approval of a Private Composition Prevention of Insolvency).
The new restructuring, if approved by the courts, will avoid a fire sale of assets and forced bankruptcy when it defaults on its debt in June. If the plan is accepted under the courts, debt maturity will be extended until June 2026. This will give the new unlisted entity three years to sell assets
Steinhoff said the purpose of the restructuring was to create a stable platform across the group to optimise the orderly, expeditious sale of its assets for the best price so it could repay lenders.
Steinhoff owns 44.5% of Pepkor, about 70% of European discounter Pepco, a stake in US Mattress Firm and an Australian furniture manufacturing company.
Steinhoff is insolvent, with debt exceeding equity by €3.5bn (R70bn). It owes its lenders, which were hedge funds, €10.2bn with debt due in June — and interest rates of 10%. Without restructuring, it will default on its debt in June.
High interest rates are hitting the company. Debt stood at €110bn at the end of September, but with interest this rose to €110.2bn by the February year-end.
The company’s interest rates are at 10%, requiring underlying companies Pepkor and Pepco, and Mattress Firm to grow at that rate just to keep up with interest payments.
Shareholders can vote on the WHOA plan between May 10 and 23. The company will publish results on May 30.
Steinhoff will then proceed to the Dutch court for it to make the plan binding on all creditors.
Steinhoff examined other options, including refinancing its debt, a debt equity swap for lenders and bankruptcy, but these were not accepted by lenders.
Once the assets are sold there will be nothing left of the company, according to the restructuring plan.
Steinhoff’s share price was R46.50 on the day before auditor Deloitte refused to sign off accounts in December 2017 and fraud was disclosed. The share price was 29c at close of trade on the JSE on Wednesday.
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