Steinhoff extended its 'early-bird fee' deadline for the second time on Wednesday, for creditors to sign a three-year agreement to hold off their debt claims, as the troubled South African retailer battles to stay afloat.
Steinhoff, the parent of the UK's Poundland chain, wants to restructure its roughly €9 billion debt, after disclosing holes in its balance sheet that wiped more than 90% off its market value and forced it into asset sales to fund working capital.
The initial deadline was set for 16 July, which was extended by 24 hours on Monday before being pushed back once again, to 22.00 GMT on Wednesday.
Creditors who sign up to the so-called 'lock-up agreement' (LUA) within this time frame will qualify for an early-bird fee.
Positive Progress
"Positive progress is being made, and the group is aiming to obtain, as soon as possible, the requisite support levels under the LUA," Steinhoff said.
Steinhoff needs at least 75% of its creditors to sign up by the final lock-up agreement deadline on Friday. Once enough creditors are locked in to the three-year deal, Steinhoff will begin restructuring its debt within three months.
The company has already agreed the main terms of a restructuring deal, under which all its debt would be restated at par and given a common maturity date of three years from the completion of the restructuring agreement.
The debt would be eligible for an interest payment of 10%, capitalising twice a year, but only paid out when it matures – a procedure dubbed 'payment in kind' (PIK).
Some of the company's external borrowings would be converted into secured debt, meaning that it would be first to be paid should Steinhoff file for bankruptcy.
Creditors have also succeeded in pushing thorough corporate governance changes. New heads have been brought in to run a new intermediate holding company, created in part to oversee Steinhoff's litigation, as well as planned asset sales.
The group's Pepco unit is seen as one of the names next in line for divestiture, but a sale process is still months away, and no sell-side advisor has so far been appointed, said a source close to the matter.
Last month, Steinhoff struck a deal to sell its Austrian Kika/Leiner furniture and household goods retail unit – the latest in a series of asset sales.
News by Reuters, edited by ESM. Additional reporting by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
