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Update on Progress of Financial Restructuring
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
UPDATE ON PROGRESS OF FINANCIAL RESTRUCTURING
Steinhoff International Holdings N.V. (the “Company” and with its subsidiaries, the “Group”)
Introduction
In accordance with the Company’s reporting obligations under paragraph (e) of clause 20 of
the lock-up agreement between, among others, the Company, Steinhoff Europe AG
(“SEAG”), Steinhoff Finance Holding GmbH (“SFHG”), Stripes US Holding, Inc. (“SUSHI”) and
certain creditors, dated 11 July 2018 (the “LUA”), please see below the monthly update on
progress in connection with the corporate and capital restructuring of the Group’s European
business (the “Restructuring”).
This report should be read in conjunction with recent market announcements (available at
www.steinhoffinternational.com/sens.php), including the monthly update issued on 17 August
2018, the lenders’ meeting presentation on 20 September 2018 and the announcements
regarding the company voluntary arrangements on 19 November 2018, 30 November 2018
and 14 December 2018.
Update on Restructuring and creditor support
The company voluntary arrangements in relation to SEAG (the “SEAG CVA”) and SFHG (the
“SFHG CVA”) were approved by the requisite majorities of their respective creditors and by
their members at meetings held on 14 December 2018.
The SEAG CVA was approved by approximately 94% of those creditors who voted (including
approval by approximately 93% of SEAG’s external financial creditors). The SFHG CVA was
approved by approximately 99% of those creditors who voted (including approval by
approximately 89% of SFHG’s external financial creditors). The relevant reports in relation to the
meetings have been filed with the English Court and notices of the results (along with the
copies of the relevant reports) have been provided to the relevant creditors and are available
at www.lucid-is.com/steinhoff.
A number of steps remain to be taken before the SEAG CVA and the SFHG CVA are fully
effective and the restructuring of the Group’s financial indebtedness is implemented, in
particular the conditions precedent to the SEAG CVA and the SFHG CVA detailed in the
relevant documents will need to be satisfied (or waived) prior to implementation. The Group
will continue to keep stakeholders informed as to the progress of these steps as appropriate.
Following the approval of the CVAs at the CVA meetings, the interim moratoriums on creditor
action against SEAG and SFHG detailed in the CVAs became effective.
Prior to the implementation of the SEAG CVA and the SFHG CVA, subject to the terms of the
LUA, the LUA will remain in force as regards all parties who are a party to it or have acceded
to it. Additionally, pursuant to the terms of the CVAs, the Long-Stop Date (as defined in the
LUA) has been extended to 5.00pm (London time) on 29 March 2019 (or such later time as may
be agreed in accordance with the terms of the relevant CVA).
The SEAG CVA documentation and SFHG CVA documentation can be downloaded free of
charge at www.lucid-is.com/steinhoff.
Mattress Firm
On 5 October 2018, Mattress Holdco Inc., Mattress Holding Corp. and Mattress Firm, Inc., along
with the direct and indirect subsidiaries of Mattress Firm, Inc. (together, “Mattress Firm”), filed
voluntary pre-packaged Chapter 11 cases in the United States Bankruptcy Court for the District
of Delaware (the “Mattress Firm Filing”).
In advance of the Mattress Firm Filing, the Company’s equity ownership in SUSHI was
contributed to SEAG.
On 21 November 2018, Mattress Firm emerged from chapter 11 after successfully completing
its reorganisation pursuant to its approved chapter 11 plan and within the 45 to 60 day
timeframe initially targeted. In accordance with its chapter 11 plan, Mattress Firm emerged
with access to $525 million in exit financing and successfully exited approximately 660
underperforming stores. On 21 November 2018, in consideration for providing the exit
financing, the providers of the exit financing received 49.9% of the equity in SUSHI with the
Group initially retaining a 50.1% equity interest, both subject to dilution in respect of a
Management Incentive Plan.
Mattress Firm believes that the reorganisation implemented by the chapter 11 plan positions it
for long-term success for the benefit of all of its stakeholders, having strengthened its balance
sheet and optimised its store footprint, thereby accelerating the turnaround of the business.
SUSHI scheme of arrangement
Shortly after the Mattress Firm Filing, on 10 October 2018, SUSHI launched an English scheme of
arrangement (the “SUSHI Scheme”) in respect of its US$200 million revolving credit facility (the
“SUSHI RCF”). The SUSHI Scheme was sanctioned on 12 November 2018 and became effective
on 16 November 2018. An order was also obtained on 13 November 2018 from the United
States Bankruptcy Court for the District of Delaware granting, among other things, recognition
of the SUSHI Scheme as a “foreign non-main proceeding” and enforcement of the SUSHI
Scheme in the United States. Pursuant to the SUSHI Scheme, the lenders under the SUSHI RCF
exchanged their rights under the SUSHI RCF for substantially similar rights under a new RCF
between, among others, SEAG (as borrower) and the Company (as guarantor).
On 16 November 2018, the contribution into the capital of SUSHI of the intragroup liabilities
owed by SUSHI to SEAG and Steinhoff Möbel Holding Alpha GmbH, and the SUSHI RCF claims
against SUSHI (and subsequent cancellation of the SUSHI RCF) were also effected.
Kika Leiner Property Holding Companies
Further to the Company's announcements on 22 June 2018 and 13 July 2018 in respect of the
agreed sale of the Kika-Leiner operating companies and property companies, the sale of the
Kika-Leiner property companies to SIGNA Group completed on 15 October 2018. This
represented the final step in the sale of Kika-Leiner by the Group.
Hemisphere International Properties B.V.
On 6 September 2018, the Group announced that the restructuring of the financial
indebtedness of Hemisphere International Properties B.V. (“Hemisphere”) had become
effective.
The new finance documents contain various provisions relating to the treatment of certain
intercompany payables from Hemisphere to SFHG following determination of the validity
and ranking of such payables pursuant to agreed binding advice proceedings, which is
expected to occur in the latter half of 2019. Following certain disposals and associated
distributions, the amount of principal outstanding of the term loan for Hemisphere as at the
date of this announcement is approximately EUR349 million.
Greenlit Brands Pty Ltd
The refinancing of certain of Greenlit Brands Pty Ltd (formerly known as Steinhoff Asia Pacific
Group Holdings Pty. Limited) (“Greenlit”) financial indebtedness was completed on 27
September 2018. This included the amendment and restatement of certain intragroup loans,
as well as a new senior revolving credit facility and bilateral facilities of AUD$256 million for the
refinancing of the existing senior financing. The refinancing provides facilities for the Greenlit
businesses through to maturity in October 2020. Greenlit remains independent from the
Company in terms of its working capital requirements. Please see the market announcement
dated 27 September 2018 for further details.
Head office liquidity
The Company continues to actively monitor cash flows and manage other liabilities (including
contingent claims, tax and bilateral facilities) as well as funding needs that may arise at the
subsidiary level. The South African business remains self-funding whilst the Pepkor Europe
(including Poundland) business continues to benefit from strong levels of liquidity. Mattress Firm
is self-sufficient following the emergence from chapter 11. Finally, the Group has recently
agreed to make an additional short-term funding facility available to Conforama to provide
working capital support to the Conforama group if required.
Update on Group governance
As announced by the Company on 19 November 2018, having led the Group through the
restructuring of the South African debt and on to the final implementation stages of the
restructuring to stabilise the Group for the next three years, Danie van der Merwe (60), who has
been Acting CEO since 19 December 2017, is stepping down from this position effective 31
December 2018. He is being succeeded by Louis du Preez. Danie will remain with the Group
until December 2019, during which period he will assist the incoming CEO and the
Management Board.
As set out in the SEAG CVA and SFHG CVA, as part of the Restructuring, it has been proposed
that certain changes to the governance of the Group companies be made, including at the
level of the Company, SEAG and Steinhoff Investment Holdings Proprietary Limited (“SIHPL”).
These changes include, notably:
• the appointment of Paul Copley to the Supervisory Board of the Company to be
recommended to be approved by the shareholders at the next annual general
meeting of the Company in due course;
• the establishment of a sub-committee of the Supervisory Board of the Company to
oversee material litigation claims in respect of the Group. The initial committee
comprises Peter Wakkie, Louis du Preez, Paul Copley and David Pauker;
• the anticipated appointment of David Pauker to the board of SIHPL to join the existing
directors, Louis du Preez and Philip Dieperink; and
• since the LUA was signed, the nominations committee of the Company has been
working with the governance working group referred to in the LUA to identify
candidates for Newco 3 (as defined in the SEAG CVA and SFHG CVA) board and the
boards of the key intermediate holding companies in the SEAG group. The process has
identified four strong candidates who are currently engaged with the Group in an
onboarding process. The Group hopes to announce those candidates publicly prior to
the Restructuring Effective Date (as defined in the SEAG CVA and SFHG CVA). In
addition, the Newco 3 board will include two directors nominated by the Company.
Those two initial directors are expected to be Louis du Preez and Theodore de Klerk.
Group structure
Pursuant to the SEAG and SFHG CVA proposals, Newcos 1, 2A, 2B, 3, 4, 5, 6A, 6, 7, 8 and 9
(each as defined in the SEAG CVA and SFHG CVA) were incorporated on or around 14
December 2018. Lux Finco 1 and Lux Finco 2 (each as defined in the SEAG CVA and SFHG
CVA) are expected to be incorporated shortly.
Financial statements and forensic investigation
As set out in the Company’s announcement of 6 December 2018:
• The forensic investigation being undertaken by PwC is now expected to be complete
by the end of February 2019. Subject to any necessary legal input on disclosure, the
Company anticipates providing the market with an overview of PwC's findings after it
has had time to review the full final report.
• The Company now estimates that it will publish its Group audited financial statements
for 2017 and 2018 by the middle of April 2019. The 2017 and 2018 financial statements
for Steinhoff Investment Holdings Ltd will be released shortly thereafter.
Please refer to the market announcement for further information.
Current management priorities
The key priorities for the management team currently include:
• Implementing the Restructuring as set out in the SEAG CVA and SFHG CVA, including
‘onboarding’ the new management boards that are being put in place as part of the post-
restructuring governance structure;
• Maintaining stability across the Group and managing the ongoing operations of the
Group, including actively monitoring cash flows, supporting operating performance,
managing other liabilities and funding needs that arise at the operating company level;
• Finalising the 2017 and 2018 Annual Financial Statements;
• Assisting PwC with the ongoing investigation into accounting irregularities together with
other work required to progress and finalize the restatement of accounts;
• Monitoring and defending any litigation claims brought against the Group and identifying
and pursuing recoveries where available; and
• Engaging with the wider stakeholder group and regulators.
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, 21 December 2018
Date: 21/12/2018 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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