STAR raises R18bn to repay Steinhoff International

Owner of well-known South African retail brands Pep and Ackermans, Steinhoff Africa Retail (STAR) [JSE:SRR] announced on Wednesday that it had successfully raised R18bn in funding from local financial institutions.

The funding was used to repay its shareholder funding of R16bn, which was provided by Steinhoff International Holdings [JSE:SNH] as part of STAR’s listing in September 2017, the retailer said in a note to shareholders.

It, therefore, facilitated the cancellation of all third party guarantees related to the financing of the shareholder funding.

By early afternoon trading on Wednesday STAR's share price was up 5.55% to R18.07, while that of Steinhoff was down 5.36% at R1.59.

The additional R2bn raised – over and above what is required to settle the Steinhoff shareholder funding – is raised in line with STAR’s growth in operations.

STAR's CEO Leon Lourens stated that “STAR has some of the top retail brands in SA and has a successful and established track record of providing value to its customers. The refinancing provides a platform from which we can grow our business to its full potential. We appreciate the confidence the banks have placed in us in this regard".

STAR's chair Jayendra Naidoo added that “STAR is now independently financed with direct financing facilities with the banks, enabling STAR to take advantage of its strong business model and excellent growth opportunities. The refinancing is another important milestone for the company and its employees".

Financing the new facilities

Of the R18bn raised, R12bn will be financed with between three and five year repayment terms at interest rates that are in line with current rates.

The remaining R6bn will be funded through preference shares issued to SA financial institutions. The preference shares are issued to facilitate the redemption of Steinhoff’s preference shares and to enable STAR’s release from guarantees applicable to these.

In April this year Steinhoff announced that it had raised R3.75bn by selling 5.8% of its shares in STAR. This after the embattled conglomerate launched an accelerated book build offering of 200 million ordinary STAR shares to help refinance debt.

Also in April, billionaire businessman Christo Wiese indicated that he would love to have Pepkor back, but that it is part of STAR, of which Steinhoff is the main shareholder.

Wiese instituted a R59bn claim against Steinhoff at the end of April.

Wiese said at the time that his legal action does not affect STAR at all, because it is against the shareholder in STAR, which is Steinhoff.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 931 votes
It depends on how the funds are used.
74% - 6247 votes
No. We should have gotten the loan elsewhere.
15% - 1285 votes