Steinhoff could be sailing into rough seas ahead after shareholders voted against the debt-restructuring deal in a meeting on Wednesday.
Earlier this year, in January, Steinhoff said that shareholders would be voting on an equity reorganisation that will reduce their voting rights significantly in terms of restructuring more than €10 billion (R197bn) debt.
The debt, incurred mostly as the group struggled to survive following massive accounting fraud exposed in 2017, matures in June this year, and a debt-maturity extension plan was hatched in December because the uncertain global economic conditions have meant the group has not performed as well as it had hoped, while it has become difficult to raise capital.
Steinhoff said in its annual report released in January that it faced many challenges associated globally with increased interest rates, higher inflation and elevated supply-chain costs in the year to September 30, last year. Operational management teams had to implement various initiatives to mitigate the potentially negative impact on their business results.
The aim of the debt extension was to create a stable platform across the group “to optimise the orderly, expeditious and value-enhancing monetisation of assets”.
During the past year, the group also moved into technical insolvency with net equity moving from positive €121m at September 30, 2021, to negative €3.5bn at September 30, last year, mainly due to the decline in the Pepco Group share price and accrual of debt interest.
On the operational outlook, the group said that while markets remain far from normal, the emergence of a larger discount and variety market in some key jurisdictions was having a positive effect on some of its businesses. Growth showed at an operational level supported by both acquisition and continued store growth and refurbishing.
With the proposed deal, shareholders would have left with 20% in an unlisted vehicle, while debt holders would take 80% of the firm and extend the debt repayment date for three years.
Shareholders were told there was no guarantee the 20% would have any value, but it was their best hope.
BUSINESS REPORT