Steinhoff shareholders reject restructuring
Almost 90% of Steinhoff shareholders have rejected the restructuring deal aimed at preventing bankruptcy, with the retail holding company now on track to default in June.
Steinhoff owes €10.2bn and will be unable to pay it when it becomes due at the end of June.
Steinhoff’s debt exceeds its assets by more than €3bn, making it effectively insolvent.
The company intends to enter a Dutch restructuring process known as the WHOA (Wet Homologatie Onderhands Akkoord/Court Confirmation of Extrajudicial Restructuring Plan) to prevent being forced into bankruptcy in June and a disposal of assets in a fire sale.
All the lenders voted in favour of the WHOA plan. However, shareholders overwhelmingly rejected it.
Lenders support the restructuring proposal, in which they agree to extend the debt repayment date to June 2026, which gives them three years to slowly sell Steinhoff’s assets at the best price possible.
Steinhoff must now decide whether to go to the Dutch courts to see if they will approve the WHOA and certify it as final and binding on all parties.
The WHOA process is new in Holland and it is not clear whether the court will approve it without shareholders’ support.
The alternative is to liquidate the company in June.
Steinhoff is in the process of selling its 50.1% stake in Mattress Firm to bedding giant Tempur Sealy and owns about 44% of SA retailer Pepkor and a 72% stake in European discount retailer Pepco along with Australian furniture manufacturer Greenlit.
Under the proposed WHOA, Steinhoff would become unlisted and held by a trust, with lenders sharing proceeds from the slow sell-off. Shareholders would receive 20% of their equity if anything is left.
However, almost 90% of shareholders rejected the proposal in voting that closed on May 24. German shareholder activist group SdK (Schutzgemeinschaft der Kapitalanleger) has instead asked for an independent restructuring expert to be appointed over Steinhoff under the Dutch Bankruptcy Act, as it believes the company has more value than its debt. SdK’s court case will be heard on June 1.
SdK believes shareholders are not receiving enough from the restructuring. SdK lawyer Marc Liebscher told Business Day that it disagreed with the value of Steinhoff as determined by the board. They believed that Mattress Firm was worth more than its current selling price and have therefore requested the appointment of an independent restructuring expert by the court. The purpose of this appointment would be to determine a fair value for Steinhoff.
The Steinhoff share price was R46.50 the day before it was announced that auditors would not sign off on accounts in December 2017, when the fraud was revealed. It was 27c in midmorning trade.