Overview of Proposed Equity Re-organisation
In light of the assessment that the value of the Group’s assets continue to be less than its
liabilities and will remain so as at 30 June 2023, and subject to further due diligence and
structuring, the commercial terms of the Maturity Extension Transaction provide that the
individual CPU creditors will be entitled to receive equity in SIHNV (or any successor entity
or other entity replacing SIHNV as ultimate parent of the Group). The Maturity Extension
Transaction proposes that the financial creditors will be entitled, individually and
independently, to receive 100% of the voting rights and at least 80% of the economic
interest in the post-closing equity of the Group.
The remaining 20% of economic interests in the post-closing equity of the Group will be
issued to existing shareholders in the form of a new instrument ranking economically pari
passu with the equity instruments issued to the financial creditors, provided that the equity
re-organisation is approved by shareholders at a general meeting to be held in Q1 2023.
If the Maturity Extension Transaction proceeds, then in view of:
• the fact that the individual financial creditors will obtain independent voting rights and
(at least) 80% of the potential economic interest in the post-closing equity of the Group
as a condition to extending the maturity dates of the Group Services Debt; and
• the very material extent to which the equity interest currently is, and expected to
remain, out of the money,
the expectation is that on or following implementation of the Maturity Extension Transaction
the existing SIHNV shares, and their current listings, will fall away, with no financial
compensation payable to existing shareholders (except for the shareholders retaining the
20% economic interest in the post-closing equity of the Group if the equity re-organisation
is approved by shareholders at a general meeting as explained above). The ultimate
holding company of the restructured Group is anticipated to be an unlisted company.
The final terms of the implementation in relation to future equity structure remain to be
finalised.
If the equity restructuring referred to in the preceding paragraphs is not approved by the
shareholders at the general meeting, it is intended that 100% of the economic interests and
voting rights in the post-closing equity of the Group will be issued to the individual financial
creditors either through a Dutch restructuring process or, if that is not pursued or is not
achieved by 30 June 2023, as a result of the financial creditors becoming entitled to
implement the equity reorganisation by way of a share pledge enforcement alongside the
implementation of other terms of the Maturity Extension Transaction. In these
circumstances, SIHNV would lose its interests in the underlying Group businesses and assets
and shareholders would retain no economic interest in the restructured Group.
Overview of Considerations
As previously reported, Steinhoff currently has Group Services Debt totalling c. EUR10 billion
which has a maturity date of 30 June 2023.
The Group Services Debt is disclosed under Corporate and Treasury Services in note 10 of
SIHNV’s unaudited results for the six months ended 31 March 2022. The Group Services Debt
Facilities are held by a number of different financial creditors some of whom are invested
across a number of Group Services Debt Facilities.
Extending the maturity date of debt of this quantum and complexity would be an extremely
difficult and complex task in normal markets, however the nature of the agreements,
together with the developments during the year including those listed below, have made
this process even more challenging:
• There are complexities inherent in the nature of the Group Services Debt, including cross
defaults, inter-connectivity and multiple investors each with unique time horizons and
interests.
• The current global uncertainties have increased both risk aversion and interest rates.
• The market values of Steinhoff’s operating entities (ultimately the underlying security for
the Group Services Debt) have been under pressure broadly in line with the global
capital markets.
• By contrast, the significant liabilities under the Group Services Debt continue to accrue
interest at material levels.
Consequently, to date it has not been possible to de-lever the Group through investment
and asset disposals and/or refinancing as quickly as originally anticipated.
In order to maintain the financial stability and therefore avoid the consequences of the
Group Services Debt maturing on 30 June 2023, the proposed extension and related terms
addresses the total Group Services Debt and allows further time to fully realise the Group’s
investments and assets.
Next steps
Steinhoff contemplates that the next steps are as follows:
• Engagement with the Group’s financial creditors to seek further support for the
proposed terms and accessions by the financial creditors to the Support Agreement
before the Early Bird Deadline.
• Further development and finalisation of terms of the proposed extension and
agreement on long form documentation.
• Seeking the necessary financial creditor and regulatory approvals required, as well as
approval from the shareholders at a general meeting, and/or, if necessary, court
approvals in one or more relevant jurisdictions.
Steinhoff will work to implement the Maturity Extension Transaction on or before 30 June
2023.
Louis du Preez, Steinhoff Chief Executive Officer and Management Board Member, said:
“Taking into account the economic and other challenges currently facing the Group this is
ultimately a very good deal for the Group. The extension allows time for the Group to realise
the inherent value of its investments in a controlled manner. As such we are greatly
encouraged by the progress made so far and we urge all stakeholders to support the
finalisation and implementation of these proposals.”
Whilst the Group believes that the Support Agreement constitutes an important and positive
step towards the proposed extension of the Group Services Debt, there is no certainty that
the necessary commercial and legal agreements and arrangements will be concluded to
successfully implement the proposed transaction. Accordingly, shareholders and other
investors in the Company are advised to exercise caution when dealing in the securities of
the Group.
Further information and updates will be provided to the market as and when available.
The Company has a primary listing on the Frankfurt Stock Exchange and a secondary listing
on the JSE Limited.