Steinhoff begins creditor talks on restructuring ailing retailer

With its €10.4bn (R156bn) of debt beginning to come due in August, Steinhoff International Holdings [JSE:SNH] kicked off restructuring talks with creditors in London on Friday.

Creditors’ advisers have been sending the owner of Mattress Firm in the US and Conforama in France initial restructuring proposals over the past few weeks, while discussing alternatives among themselves, according to people familiar with the matter, who asked not to be identified because the negotiations are private.

Any restructuring deal will be a convoluted affair, with creditors forming different groups with varying priorities.

FTI Consulting is working with bank lenders and hedge funds Attestor Capital and Davidson Kempner Capital Management, which bought bank debt and contributed new loans to Steinhoff after the December disclosure of accounting irregularities sent its securities plummeting, the people said.

The members of FTI’s committee will be allowed in the meeting alongside advisers of other groups, they said.

A representative for FTI declined to comment on the talks, while officials at Attestor didn’t return calls and emails seeking comment. A spokesman for Davidson Kempner wasn’t immediately available to comment.

Houlihan Lokey Inc is representing holders of €2.7bn of convertible notes issued by Steinhoff Finance Holding GmbH. They included Centerbridge Partners, Silver Point Capital Management and York Capital Management, people familiar with the matter said last year. Some of those bonds are indirectly guaranteed by Steinhoff’s profitable South African division, and have been trading at close to 90 cents on the euro, according to data compiled by Bloomberg.

Holders of €800m of bonds due January 2025 and funds that bought bank loans issued out of the Steinhoff Europe AG subsidiary, including Och-Ziff Capital Management, are working with adviser PJT Partners, the people said.

Representatives for PJT and Och-Ziff declined to comment.

While Steinhoff has been selling assets to raise cash, the retailer told investors last month that debt levels are too high for the strategy to be sustainable. Accountants from PwC have been hired to trawl through the finances to identify the cause of a more-than 6 billion-euro hole in the accounts and the probe isn’t expected to be completed any time soon.

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