New deadline for Steinhoff deal
• Creditors offered returns of up to 15% to back three-year standstill in claims, as group’s board seeks time to restructure finances
Steinhoff’s creditors were given a second 24-hour extension to sign up to a three-year lock-up agreement that would freeze their claims against the beleaguered company.
Steinhoff’s creditors were given a second 24-hour extension to sign up to a three-year lock-up agreement that would freeze their claims against the beleaguered company.
Its share price shot up to a three-month high of R3 on Wednesday as investors await the response to the second extension of the “early bird fee” deadline for creditors to agree to a three-year freeze on claims.
The creditors are being offered returns of between 10% and 15% to back the three-year standstill.
The Steinhoff board is hoping the holders of €9.4bn of the group’s debt will agree to give them the time necessary to restructure the group’s finances without enforcing their claims. Enforcing their repayment claims would result in a fire-sale of some of Steinhoff’s nonSouth African businesses.
The initial deadline for “early bird” acceptance was July 16.
The board has until Friday to secure the necessary backing for its lock-up agreement.
The standstill agreement that was initially put in place in June expires on Friday. If the threeyear lock-up agreement is not in place by then, creditors will be able to demand repayment on any due bonds.
Retail analyst Syd Vianello said it was a very difficult situation for the board because there was no certainty that Steinhoff’s bondholders would sign on to the lock-up agreement.
“There’s a good reason they are known as ‘vulture funds’,” said Vianello, referring to investment funds that acquire the bonds of companies in distress. “They can hold Steinhoff to ransom. It might just suit them to put the company under or force the sale of certain assets instead of waiting for three years.”
The bond holders would be near the top of the queue for payment from any asset sale.
However, one analyst who did not want to be named told Business Day he understood only a limited number of bonds had been bought up by “vulture funds” following Steinhoff’s December 6 statement referring to “accounting irregularities”.
The price of some bonds dropped to a low of 20c in the euro in December but then recovered to more than 50c.
On Wednesday Steinhoff issued a statement saying: “Positive progress is being made and the group is aiming to obtain, as soon as possible, the requisite support levels under the LUA [lock-up agreement]. ”
Wednesday’s share price hike suggests investors believe the Steinhoff board will secure the necessary support for the lock-up agreement.
IT MIGHT JUST SUIT THEM TO PUT THE COMPANY UNDER OR FORCE THE SALE OF CERTAIN ASSETS INSTEAD OF WAITING FOR THREE YEARS