Steinhoff shareholders could get some value

Steinhoff shareholders who stood to get nothing as the indebted company entered restructuring could keep 20% of their shares in the new unlisted company, under the draft Dutch restructuring plan.

This was announced on Tuesday morning, but it is still not clear if shareholders will recoup any value for their shares as Steinhoff is insolvent, with its debt exceeding its equity by €3.5bn (R70bn). It owes its lenders €10.2bn with debt due in June — and interest rates of more than 10%.

As it will default on its debt in June, Steinhoff announced a plan in December to give lenders 80% of the company, which would be delisted and allow shareholders to keep 20% of what their shares were worth.

The share price dropped almost 40% from R1.62 in the days that followed as shareholders realised their shares had little value. The share price was at 22c in midday trade on Tuesday.

In a heated AGM in March, shareholders voted against the plan. Many were angry that the hedge fund lenders were taking over the company, leaving them with next to nothing. German activist group SDK (Schutzgemeinschaft der Kapitalanlege), representing about 20% of minority shareholders, voted against all AGM resolutions.

After the plan was voted against, Steinhoff announced it would embark on a Dutch insolvency process known as WHOA (Court Approval of a Private Composition Prevention of Insolvency) that must be court approved. Under the WHOA plan, shareholders were to get nothing in exchange for their shares and lenders would take control of 100% of the company, delist it and slowly sell assets to recoup their investment.

However, after consultation about the new restructuring plan, Steinhoff and lenders have agreed to give shareholders 20% of the new unlisted company. But this stake could still be worth nothing due to the high debt and interest rates the company has to pay.

Lenders are expected to slowly sell off parts of the company. Steinhoff owns under 50% of SA retail group Pepkor, as well as about 75% of Pepco (the European discount retailer) and a stake in a US-based mattress company, as well as Greenlit Brands in Australia that owns furniture makers and stores.

SDK has said it will fight the WHOA restructuring in court.