Wrap Text
Steinhoff – Recapitalisation Of Mattress Firm
Steinhoff International Holdings N.V.
(Incorporated in the Netherlands)
(Registration number: 63570173)
Share Code: SNH
ISIN: NL0011375019
Steinhoff Investment Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1954/001893/06)
JSE Code: SHFF
ISIN: ZAE000068367
Steinhoff – recapitalisation of Mattress Firm
Steinhoff International Holdings N.V. (the “Company” and with its subsidiaries, the “Group”)
Mattress Firm financial restructuring
The Company announces that its subsidiary Mattress Firm, Inc., North America’s leading
specialty mattress retailer, along with its U.S. subsidiaries (together, “Mattress Firm”), is taking
steps to implement a pre-packaged plan of reorganisation that, among other things, provides
Mattress Firm access to new financing to support its business and establishes an efficient and
orderly process for closing certain underperforming store locations in the United States by filing
voluntary Chapter 11 cases in the United States Bankruptcy Court for the District of Delaware
(the “Mattress Firm Filing”). The Mattress Firm Filing supports actions to strengthen its balance
sheet and optimise its store footprint and is a further step in the on-going debt restructuring of
the Steinhoff Group (the “Group Restructuring”) and is designed to accelerate the turnaround
of the Mattress Firm business.
Mattress Firm is continuing to serve customers as usual at stores and online. Mattress Firm has
filed a number of customary “first day” motions with the court seeking authorisation to support
its operations during the recapitalisation process. These include motions for authority to
continue to honor secured creditors and customer programs, pay employee wages, health
and welfare benefits, and pay contractor partners and vendors in full.
Through the Mattress Firm Filing and in order to facilitate the store optimisation plan, Mattress
Firm is seeking the authority to reject up to 700 leases. An initial group of approximately 200
stores is expected to be closed in the next few days. Decisions about additional store closings
will be made in the weeks ahead.
In conjunction with its pre-packaged plan, Mattress Firm received a commitment for
approximately $250 million in debtor-in-possession financing (the “DIP Financing”), which,
subject to court approval, will be available to partly repay Mattress Firm’s ABL facility and
support its ongoing operations during the Chapter 11 proceedings. The DIP Financing has a
three-month term, and Mattress Firm expects to complete the pre-packaged restructuring
process within the next 45 to 60 days.
Mattress Firm also secured a commitment for a four-year term loan of $400 million of exit
financing (the “Exit Term Loan”) and an ABL facility of $125 million (together, the “Exit
Financing”) underwritten by a number of Steinhoff Europe AG creditors. The proceeds of the
Exit Financing will be utilized to repay the DIP Financing, repay Mattress Firm’s ABL facility (to
the extent not already repaid out of the proceeds of the DIP Financing), repay the outstanding
approximately $84m intercompany loan (incl. accrued and unpaid interest) from the
Company to Mattress Firm (put in place in 26 March 2018), to pay costs associated with the
pre-packaged plan (including the estimated store closure costs), transaction fees and
otherwise to provide working capital.
In connection with the Exit Financing, the Group has agreed certain other arrangements in
relation to the equity and debt structure of the Mattress Firm sub-group:
• Exit Lender equity – On emergence from Chapter 11, the Exit Term Loan lenders (the
“ETL Lenders”) will receive 49.9% of the equity in Stripes US Holding, Inc. (“SUSHI”) or
Mattress Firm Holdco, Inc. (the “Issuing MF Company”) at no cost (with the Group
retaining a 50.1% equity interest (held by the “Group Shareholder”), together with
related shareholder rights including governance rights (see below) and, subject to
customary terms and conditions, sale rights with the ability to bring-along a pro rata
portion of the Group’s retained equity interest.
• Exit Lender PIK debt – There will be a $150 million payment in kind loan which will
become repayable by SUSHI upon a five-year maturity.
• Management Incentive Plan - Subject to determination of the number of participants
and appropriate time, performance and hurdle rate vesting conditions, a
management incentive plan (“MIP”) will be put in place. Awards under the plan can
be made in respect of 10% of the common equity in the Issuing MF Company (which
would be dilutive of the interests of both the Group Shareholder and the ETL Lenders)
and 10% of the Exit Lenders’ PIK debt.
• Governance - The Issuing MF Company’s board will comprise five members, including
three members proposed by the ETL Lenders (with the Group Shareholder having
certain limited rights to reject any nominee of the ETL Lenders).
Additional information regarding the Mattress Firm Filing, the DIP Financing, the Exit Financing
and the lender and management equity arrangements can be accessed by visiting Mattress
Firm’s restructuring website at www.mattressfirm.com/restructuring and further related
materials can be accessed by visiting Steinhoff’s website at
www.steinhoffinternational.com/investor-presentations.php.
Danie van de Merwe of Steinhoff International Holdings N.V. said:
“Mattress Firm has been facing significant operational challenges which management is
addressing through its turnaround plan. Considering the Group’s current position, we believe
the Mattress Firm recapitalisation is the best way to support and accelerate the turnaround
plan so as to ensure a future for Mattress Firm and its employees and unlock value for
shareholders over time. The Mattress Firm recapitalisation also represents a further positive step
in the wider Steinhoff restructuring process.”
Implications for the Group and the Group Restructuring
The Mattress Firm Filing does not directly impact the other operating businesses of the Group
and is not expected to have any material effect on the trading of these operations.
As part of the Mattress Firm restructuring, the Company’s equity ownership in SUSHI has been
contributed to SEAG prior to the Mattress Firm Filing. Steps to transfer or novate the SUSHI RCF
debt with SEAG debt will be taken in the near future to replicate the proposals under the lock
up agreement entered into in respect of the restructuring and to reflect the economic interests
within the SEAG debt cluster. To implement the Mattress Firm restructuring prior to exit, the
intercompany loans will be contributed as capital by the relevant entities into SEAG and the
guarantees from Mattress Firm Inc. to these loans will be released. Following such restructuring
and as a result of the proposed equity issuance to the ETL Lenders, SEAG will own 50.1% in
SUSHI. The relevant lender consents in connection with such restructuring have been obtained.
The Group Restructuring otherwise continues in accordance with the terms of the lock-up
agreement entered into by the Company on 11 July 2018, and the Company will continue to
provide updates as appropriate.
Shareholders and other investors in the Company are advised to exercise caution when
dealing in the securities of the Group.
JSE Sponsor: PSG Capital
Stellenbosch, 5 October 2018
Date: 05/10/2018 02:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
