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Steinhoff Creditors Back Debt Holiday in Exchange for Taking Over Embattled Firm’s Equity

Steinhoff’s financial creditors have voted to back a three-year debt repayment holiday in exchange for taking over between 80% and 100% of the group’s equity.

The plan will also see the embattled furniture retailer delist from the Frankfurt and Johannesburg stock exchanges.

In an update to shareholders on Monday, Steinhoff that that three classes of creditors had voted to back the deal. Only Steinhoff’s shareholders voted against the restructuring plan. 

The retailer said it would now consider asking a court in the Netherlands, where it is registered, to confirm the restructuring. 

Drowning in debt 

Steinhoff announced late last year that it was seeking a new debt repayment holiday with its long-suffering financial creditors. 

At its annual general meeting (AGM) in mid-March, Steinhoff’s leadership said it would be unable to pay its off its €10.2 billion (R200 billion) debt burden by the due date of 30 June this year. 

Steinhoff CEO Louis du Preez told the AGM that the group risked an “inefficient and disorderly” liquidation process if it did not strike a deal.

The proposed deal comes with the strictest conditions yet imposed on the furniture retailer. 

In return for a three-year repayment holiday, Steinhoff would hand over between 80% and 100% of its equity to creditors and delist.

Retailer investors would be left with at most 20% of Steinhoff’s equity in the form of contingent value rights, depending on which version of the deal is presented to Dutch courts. 

While creditors overwhelmingly backed the deal, a German investor group says it will fight the plan in court.

The Schutzgemeinschaft der Kapitalanleger (SdK) last week filed a request for the Dutch court to appoint a restructuring expert to oversee the plan in the hope of better representing the interests of shareholders. 

The SdK has complained that the restructuring plan wrongly assumes a valuation for Steinhoff that is too low, and potentially leaves Steinhoff shareholders with nothing. 

A court hearing on the petition to for the petition to appoint an expert will be heard on Thursday.

Source: News 24