- Steinhoff will be selling its stake in Conforma France, one of its largest European subsidiaries.
- It will also be selling 18 properties occupied by Conforma France for the equivalent of about R1.3 billion.
- According to Steinhoff, Conforama France will receive new funding in two tranches as part of the agreement.
Steinhoff has announced that it will be selling its stake in one of its largest European subsidiaries, home furnishings retail chain Conforama France, to another french retailer.
In an update to shareholders on Wednesday, the Stellenbosch-headquartered conglomerate said it had agreed to dispose of its shares in Conforama France, together with certain related trademarks and domain names, to Mobilux for a "nominal sum".
"The disposal will secure the future of Conforama France, release the Group from its liabilities in respect of that business and generate cash to reduce of the current debt held by Conforama France," said Steinhoff.
As part of the transaction it will also be selling 18 real estate properties currently occupied by Conforama France for approximately €70 million (about R1.3 billion at current exchange rates).
Steinhoff said that Conforama France will receive new funding in two tranches as part of the agreement.
First, after the agreement is signed, Conforma France will receive €100m in the form of a state-guaranteed loan, and €50m from Mobilux.
"This new funding will enable Conforama France to finalise its restructuring project and support an ambitious post Covid-19 recovery plan, while honouring its commitments to suppliers and partners," said Steinhoff.
At the closing date of the agreement, meanwhile, Steinhoff said that Conforama France will benefit from a second state-guaranteed loan of €200 million, as well as a €200 million capital increase subscribed by Mobilux - which includes the €50 million received at signature.
It expects the transaction to close by the end of September 2020.
Steinhoff's share price plunged at the start of an accounting scandal in December 2017, which led to many of its top executives leaving the company. The group, which is facing litigation in Europe and SA over the sudden share price dive, has been seeking to reduce its debt burden.