Steinhoff seeks debt extension amid creditor standoff

Steinhoff-Horslepy-Park-renderSteinhoff International has warned that the financial position of several of its financial units is unsustainable beyond the next few months and has sought an extension on its major debt facilities.

In a presentation on its financial position and immediate plans in London on Friday, the scandal plagued conglomerate said several of its European financial entities were at risk of insolvency, amid a standoff with lenders over €9.6 billion in outstanding debt.

The business has been frantically renegotiating its facilities in recent months in the wake of an accounting scandal that has shaken the business to its core and said on Friday that operational funding requirements, interest costs and professional fees were weighing on its ability to right the ship.

It has formulated a restructuring package that would deliver it a three-year extension on most of its outstanding debt, during which time it would pay no cash interest on most of its loans.

Steinhoff Europe owed almost €5 billion to banks and related funds and has €1 billion in inter-company loan payables.

Negotiations will re-start with creditors from next week to finalise a restructuring framework that Steinhoff hopes will overhaul its financial obligations by 29 June.

It is expected that restrictions will have to be agreed to, which will involve asset disposal milestones, while governance proposals will also be discussed with lenders.

The Asia Pacific operating unit – which includes Australian businesses such as Fantastic Furniture, Freedom, Plush, Harris Scarfe and Best & Less – was declared to be stable, with retail operations in Austria and the US requiring additional funding.

Steinhoff expects to book a consolidated loss for the first-half of fiscal 18, impacted by impairments, advisory fees, capital losses and interest costs, but said retail revenue had increased one per cent on the prior corresponding period to €9.4 billion.

Earnings margins for the first half are slated to be between 4-5 per cent, below the 5-6 per cent restated from adjusted 1H17 accounts.

Steinhoff also restated the conditions around five significant law suits it is currently involved in on Friday, including action against former chief executive Markus Jooste and action by former chairman Christo Wiese.

 

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