THE BOTTOM LINE
All is quiet in the Steinhoff camp ... too damn quiet
A whole week has gone by without any heart-stopping announcements ... what can it portend?
It’s been quiet on the Steinhoff front. A whole week has gone by without any heart-stopping announcements; nothing since the news that the board had managed to persuade creditors (with over €9-billion on the line) to sign a three-year lock-up agreement.
With hedge funds among the creditors the scary reality is that things could have gone either way. There’s good reason why hedge funds are often referred to as vulture funds and there was always a chance they would have held out for more than the Steinhoff board was able or prepared to pay.Now the board has some flexibility as it continues to clean up the rambling portfolio of assets accumulated over many years. The latest businesses to go are two German-based companies, Impuls Kuchen, which was bought by Steinhoff in September 2015, and Puris Bad, bought in July 2003. The sales are subject to the approval of the German competition authorities.
The prospect of Steinhoff slimming down to a shadow of its previous unwieldy self highlights one significant aspect of the saga. No matter what happens the lawyers and corporate advisers always score. They would have made huge money in the process of stitching together the pieces that comprised Steinhoff circa August 2017, and now they look set to make as much money as they unstitch the group.
The operational restructure will be an important part of the financial restructuring that many analysts believe will inevitably involve a debt-for-equity swap given that it’s highly unlikely Steinhoff will be able to make the necessary debt and accumulated interest payments in 2021.