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Steinhoff facing liquidity problems and Court of Appeal decision

The decision could cast a shining light on the complex Steinhoff structure.

Short-term liquidity remains the most pressing issue for Steinhoff. If this is cut off, the various business units will immediately flounder. Hence, discussions with Steinhoff’s global banking and financing partners are ongoing. Steinhoff is also planning to appoint an external independent debt restructuring expert.

Read: Steinhoff to sell private jet as its cash runs low

Steinhoff continues to make changes to the management board. Ben la Grange has now stepped down as CFO and as a member of the management board. He will focus on the finalisation of the company’s audited 2017 annual report and the group’s liquidity status.

Philip Dieperink, subject to ratification by the general meeting of Steinhoff, is to replace La Grange as acting CFO. He will remain as the CFO of Steinhoff UK.

Liquidity problems were brought to the fore in December when credit facilities were being cancelled or suspended. This threatened to jeopardise the supply arrangements of Steinhoff’s various retail outlets, including Poundland.

Davidson Kempner, a US hedge fund, came to the rescue by granting a two-year loan facility of £180 million to Pepkor Europe, the European arm of Steinhoff International. Pepkor Europe manages various Steinhoff Brands including Poundland, Dealz, Pep&Co and Pepco. Harveys and Bensons for Beds, furniture chains owned by Steinhoff, will also be able to draw down on this facility. Having bedded down this loan, these profitable chains are expected to deliver positive cash flows, without which they could have faced a sudden death.

Despite enraging the conservative British public with some risqué adverts, Poundland enjoyed a bumper Christmas season. The adverts were cheaply distributed on the internet, where they were much liked on Facebook by the younger generation, and apparently only cost £25.53. Perhaps these adventurous adverts are another sign that Poundland is flexing its muscles and stepping away from a conservative group.

Read:Steinhoff’s Poundland reports record Christmas trading

Mattress Firm, a US subsidiary of Steinhoff International, has also managed to secure financing. It entered into a $225 million senior secured asset-based revolving credit facility with Barclays in December. In the press release dated December 22 2017, Ken Murphy, Mattress Firm’s president and CEO, stated that “This new credit facility provides independent liquidity and capital to support our strategy, and demonstrates the strength of our business, the value of our assets and the quality of our brands”.

The press release was interesting in that the legal caveats pertaining to certain “forward looking statements”, defined as any statement not based on historical fact, were longer than the actual press release. Fortunately, there does not appear to be any “regulatory investigation” into Steinhoff in the US.

The next big news item on the calendar is the forthcoming decision from the Enterprise Chamber of the Amsterdam Court of Appeal, which is expected to be announced no later than January 22. To recap, this decision concerns the dispute with a former joint venture partner who owns OM Handels GmbH and MW Handels, and who filed the petition with the court. The petition covers the treatment of a joint investment in a European retail venture. The matter was heard on September 21 2017 and relates to the September 2016 consolidated accounts. Steinhoff consolidated the investment as it was of the view that this was in compliance with IFRS. The former joint venture partner is questioning the consolidation.

There is also a hearing pending in Germany, the date hasn’t been set. This hearing concerns the resolution of the redemption of the joint venture in the European retail venture.

This Amsterdam Court of Appeal decision could cast a shining light on the complex Steinhoff structure, or it could be a damp squib.

COMMENTS   14

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Whats the point of this article. Tells us nothing new at all. Everything contained in this piece is old news already. Come on Moneyweb…surely you can do better.

Couldn’t agree more. You wold expect more from moneyweb than putting old news like this on the front page. Very poor journalism.

Agree…..there are so many other stories. Example the victims which include Francois Pienaar. Also whee in the world is markus?

What’s the story with Pienaar?

Yeah I was hoping to read some new news to base decisions on and not old news served as new news and wrapped up as “Things you need to know” news! 🙁

Agreed…this is just garbage. I’m gatvol of reading 2nd rate news on this matter.

Once again very poor journalism. This article tells us nothing new. The headline makes it looks like Steinhoff is about to close down, while the article actually lists positive news about Christmas sales and new credit lines.

Much like the Gupta bots, there are some commentators who are labelling every Steinhoff story as ‘very poor journalism’ – got to wonder who these people are?? To my mind, there’s nothing wrong with Moneyweb writing a wrap of what Steinhoff is facing in the weeks ahead.

Lots of people have investments in Steinhoff and these kind of repeat negative articles affects their investments badly. That is why there is a call for new news (and no old news) to give people the means to make informed choices going forward.
Unless ofcourse you would like to read an article every day stating that Markus Jooste has stepped down as CEO of Steinhoff?

Why the TEKKIE TOWN logo???? This article is not about Steinhoff Africa retail!?!

I’m glad that someone asked the question. That headline pic was the first thing I noticed when I opened this article. This blatant disregard for proper journalism is causing way too much confusion and spreading of rumors, within an already confused public. Both Steinhoff companies are being painted with the same brush, when in actual fact they are separate entities, with Wiese being the common denominator. That’s it.

Whats Wiesse doing? Must be on valium

He’s still a dollar billionaire. This is more about status than anything else…

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