Steinhoff seeks extra funding
Steinhoff International is assessing ways to attract extra funding for Mattress Firm to execute a turnaround of the troubled US bedding retailer.
Bought for $3.8 billion (R55 billion) two years ago, it has emerged as a headache for Steinhoff as it strives to shore up liquidity following an accounting scandal.
The 3 300-store chain expanded too aggressively, suffered from ineffective marketing and has been embroiled in a dispute with suppliers, Steinhoff told creditors in London yesterday.
Steinhoff bought Mattress Firm toward the end of an acquisition spree that preceded the uncovering of accounting irregularities in December, which wiped almost 95% off the share price.
The South African company secured an agreement with lenders over the restructuring of almost €10 billion (R169 billion) of debt in July, buying it time to stabilise an empire that also includes Conforama in France and Pepkor Europe.
Mattress Firm needs “incremental liquidity” for its recovery to be secured and management led by chief executive Steve Stagner are considering ways to access capital, Steinhoff said.
Stagner has worked at Mattress Firm since 1996, and in March returned to the chief executive job he held for six years through 2016. Mattress Firm has hired restructuring advisors including AlixPartners LLP and Guggenheim Securities, along with law firm Sidley Austin LLP.
Tempur Sealy ended its supply deal with the bedding retailer last year after Mattress Firm demanded significant concessions following the Steinhoff takeover. Tempur Sealy has since sued the retailer for allegedly “selling confusingly similar products under the ‘Therapedic’ name”.
Pepkor growth
Pepkor Europe, led by former Walmart executive Andy Bond, demonstrated a healthier financial position than its US sister company, with earnings growth across brands such as eastern Europe-focused Pepco and the UK’s Poundland.
The company is targeting more than 4 000 stores within five years, compared with 2 281 now.
Poundland said it would take over 20 stores formerly owned by its near namesake Poundworld, which went bust earlier this year.
More than 90% of the creditors across units Steinhoff Europe AG (Seag), Steinhoff Finance Holding, and Stripes US have now agreed to the debt restructuring.
The company plans to kickoff a so-called company voluntary arrangement in the UK for the Seag unit on October 19. It also completed the refinancing of the real estate unit Hemisphere, extending the maturity of €775 million of loans to December 2021.