Steinhoff owed in Australasia
• Scandal-ridden parent firm has noose around its Australasian subsidiary
Steinhoff International will remain a creditor to its Australasian subsidiary for at least another three years, despite the latter doing its level best to put as much distance between itself and the scandal-hit parent.
Steinhoff International will remain a creditor to its Australasian subsidiary for at least another three years, despite the latter doing its level best to put as much distance between itself and the scandal-hit parent.
Steinhoff Asia-Pacific, which operates primarily in Australia and New Zealand, announced on Thursday it had secured a new senior revolving credit facility and other working capital facilities amounting to A$256m ($185m) from a consortium of three Australianbased banks. The facilities will mature in October 2020, providing much needed breathing room for Steinhoff Asia Pacific to continue operating without facing demands from lenders.
Steinhoff International will still be owed A$324.4m ($234m) by the Australasian subsidiary, which is only due to be repaid in 2021. Some of the debt is owed to Steinhoff Europe AG (SEAG), one of Steinhoff International’s two problematic finance companies that are facing severe liquidity and solvency challenges.
The outstanding money has been apportioned into two tranches, with Tranche A repayable in March 2021, while Tranche B becomes due in June of the same year. While SEAG will have to wait to be repaid, it has been “released” as a guarantor in relation to the Australasian subsidiary’s indebtedness.
“Things are going as expected. Steinhoff Asia was always independently financed and a well regarded subgroup within Steinhoff. It has taken a while for facilities to be put together but I guess every line item needed to be negotiated and the mechanics of how to release guarantors requires consent from all lenders. The execution risk was to set a new pricing benchmark and give a sense of stability,” says Jones Gondo, a Nedbank Investment Bank credit analyst.
He has been impressed with Steinhoff International’s determination to stave off bankruptcy. “They have done well across the group to manage liquidity, refinancing risk and renegotiating terms. Now it is just the legal process under way at headquarters that must be dealt with,” Gondo says in relation to the number of legal processes by various representatives of investors to recover money from the alleged fraud that has taken place.
Steinhoff Asia-Pacific — which incorporates such brands as Freedom, Fantastic Furniture, and Snooze, said it will be changing its name to Greenlit Brands but would remain a part of Steinhoff International for the foreseeable future. Greenlit Brands will continue to be a wholly owned subsidiary of Steinhoff International. No decision had been made concerning the separation from ownership by Steinhoff International,
The subregion has been untainted by scandals plaguing its parent company, and its financial health has remained robust. The region booked revenue of €644m for the six months ended March 2018 (unaudited) and earnings before interest, tax, depreciation and amortisation (ebitda) of €34m.
Steinhoff International also announced it would be making “certain amendments” to existing trade mark licences used solely within the Asia-Pacific business. These refer to licence agreements between Steinhoff International and its subsidiaries, which lets the parent earn royalties from the use of various brands and trademarks that it owns and permits various group companies to use.
Steinhoff Asia Pacific paid brand royalties to related parties — presumably the parent company — of nearly A$10m ($7.2m) in its financial year ended September 2017. Steinhoff International says the new arrangement will provide “enhanced rights” to the Asia Pacific Group.
THINGS ARE GOING AS EXPECTED. STEINHOFF ASIA WAS ALWAYS INDEPENDENTLY FINANCED