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Steinhoff seeks extra funding to aid Mattress Firm revival

The first of two meetings with lenders is scheduled to last for almost 3 1/2 hours.
Steinhoff bought Mattress Firm toward the end of an acquisition spree that preceded the uncovering of accounting irregularities in December. Picture: Mike Blake/Reuters

Steinhoff International is assessing ways to attract extra funding for Mattress Firm to execute a turnaround of the troubled US bedding retailer.

Bought for $3.8 billion two years ago, Mattress Firm has emerged as a headache for Steinhoff as it strives to shore up liquidity following an accounting scandal. The 3 300-store chain expanded too aggressively, suffered from ineffective marketing and has been embroiled in a dispute with suppliers, Steinhoff said in a presentation to creditors in London on Thursday.

Steinhoff bought Mattress Firm toward the end of an acquisition spree that preceded the uncovering of accounting irregularities in December, which wiped almost 95% off the share price. The South African company secured an agreement with lenders over the restructuring of almost R26.3 billion ($11.7 billion) of debt in July, buying it time to stabilize an empire that also includes Conforama in France and Pepkor Europe.

Mattress Firm needs “incremental liquidity” for its recovery to be secured and management led by Chief Executive Officer Steve Stagner are considering ways to access capital, Steinhoff said. Stagner has worked at Mattress Firm since 1996, and in March returned to the CEO job he held for six years through 2016. Mattress Firm has hired restructuring advisers including AlixPartners LLP and Guggenheim Securities, along with law firm Sidley Austin LLP.

Tempur Sealy ended its supply agreement with the bedding retailer in 2017 after Mattress Firm demanded significant concessions following the Steinhoff takeover. Tempur Sealy has since sued the retailer for allegedly “selling confusingly similar products under the ‘Therapedic’ name”.

Steinhoff shares declined 5.5% as of 12:33 pm in Frankfurt, where the company moved the primary listing from Johannesburg in 2015.

Pepkor growth

The first of two meetings with lenders on Thursday is scheduled to last for almost 3 1/2 hours and includes presentations from the management of all Steinhoff’s major chains. Pepkor Europe, led by former Walmart executive Andy Bond, demonstrated a healthier financial position than its US sister company, with earnings growth across brands such as Eastern Europe-focused Pepco and the UK’s Poundland. The company is targeting more than 4 000 stores within five years, compared with 2 281 now.

Earlier Thursday, Poundland said it would take over 20 stores formerly owned by its near namesake Poundworld, which went bust earlier this year.

More than 90% of the creditors across units Steinhoff Europe AG, Steinhoff Finance Holding and Stripes US have now agreed to the debt restructuring. The company plans to kick off a so-called Company Voluntary Arrangement in the UK for the SEAG unit on October 19. It also completed the refinancing of the real estate unit Hemisphere, extending the maturity of 775 million euros of loans to December 2021.
Updates with restructuring advisers in fourth paragraph.

© 2018 Bloomberg L.P

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So the so called news/facts/rumour about Mattress Firm imminent and inevitable soon filing for bankruptcy that were spread (some even said or copied that it was officially announced), then over copied with some spices were with no solid basis and no solid sources. Let alone the previous news/facts/rumour (and on top of it the so called financial experts) about Steinhoff being a Ponzi scheme that has half properties, no sustainable business and only thieves, pipe smoke and polished mirrors, and the inevitable doom and gloom were all sensationalized words put next to each others to form some lines for the readers entertainment.

John:

Keep the faith, there is no going wrong with a company where the directors share both values and competence.

Go leveraged long,
nothing can go wrong!

The foolhardy ignorance of the disgraced Steinhoff NV to implement major emergency cost-cutting measurements (such as renegotiating rental rates of the various stores, closing down loss making units, drastically cutting back on their over-stocked staff compliment and on overhead expenses), will force the group to sell some more good assets and brands in order to fund the cap of negative operational cash-flow. Begging for even more loans is not a healthy solution.

Not sure what cost-cutting measures have been put in place. All one sees is HUGE extraordinary expenses being incurred by the acts of Steinhoff who caused the share price to collapse in Dec 2017 after not publishing audited financials due to alleged “accounting irregularities”.

Steinhoff refuses to disclose any “accounting irregularities” or “reports” issued by PWC to date.

Steinhoff appears to be defeating the ends of justices by not formalizing their own criminal charge(s) against Jooste.

If no “accounting irregularities” are found as testified by Jooste in Parliament then who will be suing who?

IMHO:

Nobody will be able to sue if no accounting regularities.

That is the whole point of limited liability companies as opposed to individuals.

That is also why all the pseudo guvmint agencies (eg competition authorities) around the world go for the company (who has the bucks) and not the individual who however wealthy seldom has enough to satisfy the demands of failing socialist policies

Tough but that is what risk and companies versus individuals is all about.

There may be other reasons of course to institute legal action.

End of comments.

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