Steinhoff shares opened higher Friday but have since moved into the red, amid news the South African-based retailers’ creditors have agreed to a new debt restructure plan.
Steinhoff has secured an additional three years to repay its debt commitments, as it works to remain open for business, following the accounting scandal that was uncovered in 2017.
By 1140 BST, Steinhoff shares were 5.65% lower at €0.22. The stock initially opened higher at €0.24. The stock has been edging upwards in recent weeks.
Steinhoff’s debt restructure plan
Steinhoff has been working hard to find a solution to the financial problems the business is now in, after its former CEO Markus Jooste and Chairman Christo Wiese both left the firm in the wake of the accounting irregularities.
And it appears that the retailer has created a plan that’s acceptable to all its creditors.
Over 90% of Steinhoff’s creditors have agreed to hold their current debt levels for the next three years. This should allow a new finance restructure – that’s expected to be implemented in just three months – to support the retailer’s plans to move forward.
“The Company is pleased to announce that the lock-up agreement (LUA) in connection with the restructuring of the financial indebtedness of the Company, Steinhoff Europe AG, Steinhoff Finance Holding GmbH and Stripes US Holding Incorporated, has today become effective in accordance with its terms,” Steinhoff said in a statement.
“The parties to the LUA will now seek to implement the Restructuring within three months. Once the Restructuring has been implemented, the terms of the Restructuring will remain in place for three,” it added.
Breathing space for Steinhoff
The approved implementation of the debt lock-up and restructure, gives the embattled retailer some much needed breathing space.
The owner of Conforama in France and Mattress Firm in the US has already struggled with a number of claims on its dwindling available finances and there is simply no way the firm is in a position to repay the debt it still owes around the world.
However, once the new debt plan is firmly in place, the business should then be able to focus on working towards improving its business and become one that creditors are happy to work with