South African-based Steinhoff International has announced that the sale of its Kika-Leiner operating companies and property companies has been given clearance from Austrian competition authority, and has also been completed.
“The sale of [Kika and Leiner] in the Czech Republic and Slovakia remains conditional upon merger clearance being received from the competition authorities in the Czech Republic and Slovakia,” the company said in an update for investors.
When the sale was announced in late June, the consideration for the operating companies was noted to be “nominal”, while the property companies were based on an agreed enterprise value of $770 million.
Steinhoff CEO Danie van der Marwe explained that liquidity constraints for the Kika/Leiner businesses “would have placed significant further cash demands on the wider Steinhoff Group given the businesses are both loss-making and require significant investment to implement the turnaround.”
The purchaser, SIGNA real estate group, has prior restructuring experience in the retail sector, and offers the businesses the “support required at this time,” according to van de Marwe.
The sale will be welcome news to Steinhoff, as it attempts to stave off debt claims while the resutructing its significant debt.
The company recently signalled the beginning of a lock-up agreement; a major component of its restructuring plans.
“The launch of the [lock-up agreement] marks the culmination of several weeks of discussions with the ad hoc committees of third party creditors… and represents an important step in the restructuring process,” Steinhoff said in a statement.
Should creditors agree to the agreement by July 20 the company’s restructuring plan will be implemented within three months.
Late last year, the company came under investigation on potential fraud charges, with shares dropping 80 per cent in the aftermath of the claims signalling the beginning of a difficult period.
The conglomerate’s subsidiary, Steinhoff Asia Pacific, recently considered a name change in an effort to distance itself from its troubled parent company.
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