Stein­hoff over­haul chal­lenged by for­mer part­ner

Business Day - - FRONT PAGE - War­ren Thomp­son Fi­nan­cial Ser­vices Writer

Em­bat­tled fur­ni­ture re­tailer Stein­hoff is fac­ing a new chal­lenge to its at­tempts to strengthen its bal­ance sheet, with for­mer busi­ness part­ner An­dreas Seifert op­pos­ing an agree­ment reached with cred­i­tors in De­cem­ber.

The deal, re­ferred to as a com­pany vol­un­tary ar­range­ment (CVA), was reached with and ap­proved by an over­whelm­ing ma­jor­ity of cred­i­tors in De­cem­ber and two Stein­hoff sub­sidiaries, Stein­hoff Europe AG (SEAG), and Stein­hoff Fi­nance Hold­ing Gmbh (SFHG).

The im­ple­men­ta­tion of the CVA would now be de­layed un­til the ap­pli­ca­tion brought by LSW, a Ger­man en­tity as­so­ci­ated with Seifert, had been re­solved, Stein­hoff said in a state­ment on Fri­day.

CVAs al­low fi­nan­cially dis­tressed busi­nesses to come to an agree­ment un­der UK law with cred­i­tors, of­ten by ne­go­ti­at­ing more favourable lease agree­ments and al­low­ing some out­lets to close be­fore leases ex­pire.

Markus Jooste, Stein­hoff’s for­mer CEO, told MPs in Septem­ber 2018 that the group’s near-col­lapse had orig­i­nated from a pro­tracted dis­pute with Seifert.

The le­gal bat­tle, mainly over the valu­a­tion and own­er­ship of Ger­man fur­ni­ture chain Poco, led to in­ves­ti­ga­tions by Euro­pean reg­u­la­tors and tax au­thor­i­ties that at­tracted the at­ten­tion of Stein­hoff’s au­di­tors at Deloitte.

Jooste re­signed in De­cem­ber 2017 after Stein­hoff’s board dis­agreed with his plan to re­place the au­di­tors and pub­lish unau­dited fi­nan­cial re­sults.

COR­PO­RATE SCAN­DAL

His res­ig­na­tion, along with an ac­knowl­edg­ment of ac­count­ing ir­reg­u­lar­i­ties, trig­gered a col­lapse in Stein­hoff’s share price, wip­ing more than R200bn off the com­pany’s mar­ket value in what has be­come SA’s big­gest cor­po­rate scan­dal.

On Fri­day, Stein­hoff told Busi­ness Day the CVA still stood, to­gether with the mo­ra­to­rium on cred­i­tor ac­tion.

“We and our ad­vis­ers need to re­view the sub­stance to the chal­lenge and as­sess the next steps and likely tim­ing im­pli­ca­tions.

“We will press to have the mat­ter re­solved as soon as pos­si­ble,” it said.

At­tempts to reach LSW for com­ment were un­suc­cess­ful.

Seifert is also still em­broiled in lit­i­ga­tion with Stein­hoff on other is­sues.

He is su­ing two Stein­hoff sub­sidiaries, AIH In­vest­ment Hold­ing AG and SEAG, for €249m plus in­ter­est and costs.

This is in re­spect of an out­stand­ing por­tion of a €300m loan ad­vanced by Seifert in 2011. Stein­hoff is op­pos­ing this claim, and the dis­pute is on­go­ing in the

Aus­trian courts.

Stein­hoff’s SEAG and SFHG acted as trea­suries to the wider group, rais­ing debt from ex­ter­nal lenders and plac­ing sur­plus cash from group com­pa­nies to fund on­go­ing bor­row­ing re­quire­ments.

The two com­pa­nies col­lec­tively hold most of the debt bor­rowed by the group, which is well above €10bn, ac­cord­ing to the most re­cent court fil­ings.

Stein­hoff’s mar­ket cap­i­tal­i­sa­tion was €467.6m at the mar­ket close on Fri­day.

It was these sub­sidiaries which be­came in­sol­vent fol­low­ing devel­op­ments in De­cem­ber 2017, which prompted the com­pany to seek re­lief from cred­i­tors through an or­derly re­struc­tur­ing process. /

Markus Jooste

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