Creditors stand behind Steinhoff

Steinhoff International soared more than 50% after winning support from a majority of its key creditors for a standstill agreement through the end of June, giving the retailer breathing space to avoid insolvency proceedings.

The support letter for Steinhoff’s restructuring plan is the first step taken by creditors toward a debt agreement. The retailer told investors last month it wants a three-year extension of most of its €9.6 billion (R 146 billion) of debt with no cash interest paid for the period.

“This is a stepping stone to get a bigger agreement together in the next three and a bit weeks,” said Charles Allen, a London-based analyst at Bloomberg Intelligence. “It’s still complicated with financials only due on June 27. This will produce balance sheets which will be vital in terms of visibility and bringing lenders to the table.”

The supporting creditors include holders of more than half of Steinhoff Finance Holding’s €2.7 billion of convertible bonds, as well as holders of 61% of Steinhoff Europe’s €5.8 billion debt, the company said. The creditors also include Steinhoff units that are owed money by those two subsidiaries.

The group agreed they will not bring legal proceedings or enforce their rights under their holdings, the company said. Other creditors may join the accord, which will reduce going concern risks under Austrian insolvency laws, it said.

The creditors will be entitled to a fee payable with more debt at completion of the restructuring process, according to the statement.

Bank lenders and hedge funds Attestor Capital and Davidson Kempner Capital Management, which bought bank debt and contributed new loans after the December accounting disclosure, are working with adviser FTI Consulting. Convertible-bondholders including Centerbridge Partners, Silver Point Capital Management and York Capital Management are being advised by Houlihan Lokey Incorporated.

Holders of €800 million of bonds due January 2025 and funds that bought bank loans issued out of Steinhoff Europe AG, including Och-Ziff Capital Management, are working with adviser PJT Partners. – Bloomberg

This is a stepping stone to get a bigger agreement together in the next three and a bit weeks. It’s still complicated with financials only due on June 27. Charles Allen London-based analyst at Bloomberg Intelligence