South Africa: Steinhoff creditors back off debt claims as reinforcement

Creditors of embattled South African company Steinhoff  International Holdings have decided to give room to the retailer from its debt obligations, while it concludes a debt restructuring.

Steinhoff confirmed this on Tuesday, adding that holders of 75 percent, 83 percent and 75 percent of three convertible bonds have agreed to a standstill agreement on debt claims. Prior to this development, the company announced plans to undergo restructuring to put creditors at ease, which would include measures such as fixing the maturity for all loans at three years from the restructuring date.

In May, the retailer announced it repaid $2.34 billion of its debt in Africa since the beginning of this year. This follows the repayment of $1.26 billion in shareholder loans by its local unit, which was obtained from the proceeds of a fundraising.

“Save for working capital facilities of the automotive business and the African properties division, the group has no remaining African debt,” it said in a statement. Funds raised by its local unit Steinhoff Africa Retail (STAR) from South African financial institutions was used to repay the loan which was provided by Steinhoff as part of STAR’s listing in September 2017.

Steinhoff, which is fighting for survival after discovering holes its books six months ago, however, still has about 8.7 billion Euros of debt attributable to Europe and 25 million Euros to the U.S. operations.

Since it discovered accounting irregularities in December 2017, the retailer has been fighting for survival. The accounting scandal sparked a sell-off in its shares, wiping more than $10 billion off its stock market value and opened its door to multiple investigations globally.

South African tycoon and owner of Shoprite Christo Wiese, in April, launched a $4.8 billion lawsuit against Steinhoff Holdings over investments he made prior to the accounting scandal that rocked the company. The billionaire is looking to obtain the value of the investments he made before the share price crashed amid the accounting scandal, his investment company Titan Group informed Blomberg.

Following news that Wiese intended to sue Steinhoff, Mail & Guardian reported that the company’s share price fell by more than 13% to trade at R1.92 at market close, making it the first time the group’s shares have traded below R2.00.