Steinhoff International soared more than 50% after winning support from a majority of its key creditors for a standstill agreement through the end of June, giving the scandal-hit retailer breathing space to avoid insolvency proceedings.
The so-called support letter for Steinhoff’s restructuring plan is the first step taken by creditors toward a debt agreement with the South African company, which in December reported accounting wrongdoing that wiped more than 96% off its market value. Steinhoff, which owns Conforama in France and Mattress Firm in the US, told investors last month it wants a three-year extension of most of its 9.6 billion euros ($11.3 billion) of debt with no cash interest paid for the period.
“This is a stepping stone to get a bigger agreement together in the next three and a bit weeks,” said Charles Allen, a London-based analyst at Bloomberg Intelligence. “It’s still complicated with financials only due on June 27. This will produce balance sheets which will be vital in terms of visibility and bringing lenders to the table.”
The shares traded 27% higher at 10 euro cents as of 9:36 am in Frankfurt, where Steinhoff moved its primary listing from Johannesburg in 2015.
The supporting creditors include holders of more than half of Austria-incorporated Steinhoff Finance Holding GmbH’s 2.7 billion euros of convertible bonds, as well as holders of 61% of Steinhoff Europe AG’s 5.8 billion euros debt, the company said in a statement late Wednesday. The creditors also include Steinhoff units that that are owed money by those two subsidiaries.
The group agreed they will not bring legal proceedings or enforce their rights under their holdings, the company said. Other creditors may join the accord, which will reduce going concern risks under Austrian insolvency laws, it said.
The creditors will be entitled to a fee payable with more debt at completion of the restructuring process, according to the statement.
Bank lenders and hedge funds Attestor Capital and Davidson Kempner Capital Management, which bought bank debt and contributed new loans after the December accounting disclosure, are working with adviser FTI Consulting. Convertible-bondholders including Centerbridge Partners, Silver Point Capital Management and York Capital Management are being advised by Houlihan Lokey Inc.
Holders of 800 million euros of bonds due January 2025 and funds that bought bank loans issued out of Steinhoff Europe AG, including Och-Ziff Capital Management, are working with adviser PJT Partners.
© 2018 Bloomberg