Steinhoff to sell Conforama France for nominal amount
As part of continuing efforts to contain fallout from its R100bnplus accounting fraud and build cash buffers to withstand the Covid-19 economic shock, Steinhoff will raise €70m (R1.3bn) from the sale of store properties in France.
Under the deal, Steinhoff will offload its struggling French business, Conforama France, alongside some of its trademarks, for a nominal amount, but it would net €70m from the sale of properties occupied by the division, the future of which was uncertain after it failed to secure a state-guarantee loan to navigate challenges posed by Covid-19 rolling economic destruction.
The deal frees up Steinhoff from trawling its empty coffers to support Conforama France as the SA company grapples with a mountain of debt and billions of rand in lawsuits from aggrieved business partners and shareholders, who had their equity wiped out in 2017 when the company revealed accounting irregularities.
As part of the transaction, Conforama France will receive a cash injection of altogether €550m from the state-guarantee loan and the buyer Mobilux
Sàrl, which owns one of France’s biggest retailers of furniture, appliances and consumer electronics called BUT.
“The disposal will secure the future of Conforama France, release the group from its liabilities in respect of that business and generate cash to reduce the current debt held by Conforama France,” Steinhoff said in a statement.
The deal is subject to regulatory approval, but it has the backing of Steinhoff’s creditors, who agreed to hold off claims on the company’s €9.6bn debt pile until 2021 in exchange for a say in what assets could be sold. The transaction is expected to be completed in September. Steinhoff has been a touch-and-go for more than two years after revealing the fraud in which intercompany transactions equivalent to about R120bn were inappropriately recorded as external income to prop up profits and hide losses at money-losing subsidiaries.
Following the untangling of Steinhoff and the transactions, and getting breathing room from creditors, legal claims that topped at least R170bn are the company’s next biggest immediate challenge.
They include a R59bn claim from former chair Christo Wiese, who lost the most as he was the biggest shareholder with a stake of about 20%.
Other aggrieved partners include Lancaster — an investment firm that used a loan from the R2-trillion government employees’ pensions investor, the Public Investment Corporation, to buy into Steinhoff — with an R11.6bn claim.
GT Ferreira, a cofounder of FirstRand, is demanding R1.2bn for swapping his trust’s shares in investment heavyweight PSG Group for Steinhoff.
At close of trade, Steinhoff’s share price was 2.02% lower at R1.01, having lost more than 98% of its value in three years.