Dutch allow Steinhoff six weeks to come up for some air
VEB, which wants compensation for losses incurred by the retailer’s shareholders, agrees standstill till May 15
Steinhoff International has been granted another reprieve, with European shareholder association VEB agreeing to give the embattled retailer another six weeks’ breathing room so that it can stabilise itself.
VEB, which wants compensation for losses incurred by the retailer’s shareholders, has agreed to extend a standstill agreement between the parties until May 15. After that date, VEB would be free to continue with its legal proceedings, or to reach a settlement through negotiations, Steinhoff said.
“The suspension will grant Steinhoff time to continue the ongoing restructuring of its business, make further progress with the internal investigations and finalise its 2017 and 2018 financial statements,” the company said.
VEB has sued Steinhoff in the Netherlands for publishing misleading financial statements, prospectuses and press releases. But it agreed to the extension because it supports the stabilisation of Steinhoff in the interests of its current and former shareholders, the retailer said.
A VEB representative said he could not provide further details about its class action suit against Steinhoff, although past media reports indicate that VEB has the backing of about 3% of Steinhoff’s shareholders.
In March, the overview of PwC’s forensic investigation into Steinhoff revealed that an estimated €6.5bn worth of fictitious transactions between 2009 and 2017 had inflated the group’s profits and asset value.
Last week Steinhoff received some more good news from the UK when its path was cleared to implement a process aimed at restructuring its debt-laden balance sheet.
Steinhoff’s attempt to implement a company voluntary arrangement (CVA) process in the UK had been stymied since January by LSW GmbH, a group understood to have links to its former partner Andreas Seifert. On January 10, LSW challenged the CVA on the grounds of an alleged debt of about £291.4m it was owed by Steinhoff Europe.
CVAs are used in terms of UK law by financially distressed businesses to reach agreements with unsecured creditors and to secure more favourable rental agreements. Steinhoff’s CVA would freeze debt repayments for three years.
Steinhoff said last Friday it was now able to go ahead with the CVA, having reached a settlement with LSW. It also extended the deadline for the closing of its restructuring arrangement to May 31.