Steinhoff to meet lenders on debt
Embattled global retailer Steinhoff International is facing a tough few weeks, with the company expected to meet its lenders later in May to come up with a plan to restructure its enormous debt. At close of trade on Friday, its share price was at a record low of R1.91, reducing its market capitalisation to R8.2bn.
Embattled global retailer Steinhoff International is facing a tough few weeks, with the company expected to meet its lenders later in May to come up with a plan to restructure its enormous debt.
The share price has plunged more than 95%. At close of trade on Friday, it was at a record low of R1.91, reducing its market capitalisation to R8.2bn.
Reports emerged last week that auditors PwC would investigate why Steinhoff Austria distributed shares worth R198bn back to its parent company in 2016 when the subsidiary was valued at only R19.9bn.
It was also reported that acting CEO Danie van der Merwe repaid a R26.4m loan backed by company shares. The loan was taken out before the stock collapsed in November.
Bloomberg reported Steinhoff will meet lenders on May 18 to discuss restructuring debt of about R155bn. Market watchers fear that the retailer may not have enough money to fend off creditors and settle future litigation from shareholders.
Independent retail analyst Syd Vianello said that lenders “will probably demand conversion of part of their loans to equity on their terms, such as a massive writedown of Steinhoff equity to, say, R1 per share or less”. This could also involve taking assets such as Steinhoff Africa Retail in return for payment or part repayment of the loan.
The US and Australia divisions would probably be sold.
“Ordinary shareholders will be crowded out to virtually no value, banks and bond holders will own the firm,” said Vianello.
Local investigations, including by the Hawks, are expected to be protracted.
Steinhoff, which is also being scrutinised by a joint sitting of three parliamentary committees, is due back before legislators only in August.
Finance committee chairman Yunus Carrim said on Sunday that little progress could be made without the results of the probe under way by PwC.