Steinhoff International [JSE:SNH] won 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 told investors last month it wants a three-year extension of most of its €9.6bn of debt with no cash interest paid for the period.
The supporting creditors include more than of half the holders of Austria-incorporated Steinhoff Finance GmbH’s €2.7bn of convertible bond - as well as 61% of Steinhoff Europe’s €5.8bn debt, the company said in a statement late on Wednesday.
The creditors also include Steinhoff units that that are owed money by the 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 shares fell 3.1% on Wednesday in Frankfurt, where Steinhoff moved its primary listing from Johannesburg in 2015.
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.
Holders of €800m of bonds due January 2025 and funds that bought bank loans issued out of the Steinhoff Europe, including Och-Ziff Capital Management, are working with adviser PJT Partners.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER