Steinhoff International's share price sank 33.3% to only 4 cents on Friday after it said in interim results to March 31 that the sum-of-the-value of its key investments currently did not cover its debt.
This month, a Dutch court approved management's restructuring plans that had been opposed by shareholders at two previous shareholder meetings.
The share price on Friday had already fallen precipitously from a closing price of 29C on June 20, 2023, the day before the Dutch court approved the restructuring plan.
At the start of the year, the group, which had needed to restructure as it was unable to repay €10.3 billion (R210bn) in debt by June 30, 2023, outlined a plan that would extend the maturity date of debt to June 2026, but shareholders would have had to forfeit 80% of their voting and economic rights, and the group would be de-listed.
At the annual meeting in March 2022, according to the financial results on Friday, 61% of the shareholders who participated voted against the scheme.
Steinhoff's management and supervisory board then initiated a Dutch WHOA Restructuring Plan during May 2023, and on May 30, the group announced that three of four stakeholders classes supported the proposal, ‘’while the shareholder class was split with almost 90% of the votes rejecting it.’’
On May 31, 2023, Steinhoff’s management filed a request at the District Court of Amsterdam to confirm the restructuring, and a hearing took place on June 15.
On June 21, 2023, the District Court confirmed the restructuring plan.
‘’Steinhoff and its subsidiaries will now proceed to implement the ‘WHOA Restructuring Plan’, which is now expected to close on or before June 30, 2023,’’ the group said in its interim results on Friday.
Its management said the restructuring was necessary because their global retail operations were severely affected by volatile global macroeconomic conditions during the 2022 financial year, and the impact on capital markets meant company valuations reduced, the availability of capital evaporated, and the cost of capital increased significantly.
The group assets were less than liabilities by that time, and there were no other opportunities prior to the debt expiry term of June 30, 2023, they said.
The group's status changed to that of an investment company from October 1, 2022. Accounts holding €285.6 million of the group's funds were subject to South African Reserve Bank approval before any withdrawal could take place.
After March 31, 2023, the group sold its shareholding in Mattress Firm in the US to Tempur Sealy in a cash and share transaction of about $4bn (R75).
On May 29, 2023, Greenlit Brands, which operates in Australia and New Zealand, sold The Bedding Group for A$60m (R751m).
As at March 31, the ‘’some-of-the-parts’’ value of Steinhoff investments, including the €7bn value of investments with exit strategies, was €7.45bn, which left it in a €2.93bn some-of-the-parts deficit when taking the debt into account.
Pepkor Holdings, in which Steinhoff has a 44% stake and which has the biggest retail footprint in southern Africa with 5 900 stores, reported a 11.3% decline in headline earnings per share to 80.3 South African cents due mainly to tougher trading conditions as its consumers face financial challenges.
Pepco Group, the variety retailers in Europe 73% held by Steinhoff, was on track to meet new store opening targets, drive better returns through a refit programme, and was anticipating improved half margins in the second half.
The valuation of Greenlit Brands increased from €359m on October 1, 2022, to €398m at the end of March 31, 2022.
BUSINESS REPORT