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.
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