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Is the worst over for Steinhoff? Creditors support plan to rescue embattled retailer

EDINBURGH — South African multinational retailer Steinhoff has been on the brink of collapse since its CEO Markus Jooste stepped down amid allegations of financial irregularities. Authorities in Europe and South Africa are investigating the possibility that crimes have been committed. In the meantime, Steinhoff executives around the globe have been working on various plans to save businesses and jobs. Shareholders and other stakeholders will be relieved to hear that most Steinhoff International Holdings NV creditors support a plan to restructure debt. There are still some ‘i’s to dot and ‘t’s to cross, but the news has been sufficiently positive to give the Steinhoff share price a bit of a boost. – Jackie Cameron

By Luca Casiraghi and Janice Kew

(Bloomberg) – Steinhoff International Holdings NV won support from a majority of creditors to restructure its 9.4 billion euros ($11 billion) of debt, seen by the embattled retailer as a vital step toward its recovery from an accounting scandal.

The owner of Conforama in France and Mattress Firm in the US sought a three-year extension to payments due to lenders and bondholders as the South African company repairs its balance sheet. About 89 percent of holders of debt in Steinhoff Europe AG agreed to the terms and the retailer will seek to wrap up the plan by the Friday deadline, according to a Thursday statement.

A company sign stands inside the Steinhoff International Holdings NV company headquarters in Stellenbosch on May 14, 2018. Photographer: Dwayne Senior/Bloomberg

The shares gained 12 percent to 0.22 euros as of 12:52 p.m. in Frankfurt, where the company moved its primary listing from Johannesburg in 2015. The stock has shed 93 percent of its value since late last year, when Steinhoff reported financial irregularities and Chief Executive Officer Markus Jooste quit.

Between 92 percent and 99 percent of holders of convertible bonds due 2021, 2022 and 2023 issued out of Steinhoff Finance Holding GmbH backed the plan, while holders of 89 percent of Stripes US Holding Inc. debt signed the agreement.

The company still needs to complete final steps before the lock-up agreement with creditors becomes effective, Steinhoff said.

One of the conditions is that directors of its Austrian units Finance Holding GmbH and Europe AG must establish a “positive going concern,” it said in a statement last week. If the agreement fails to come into force by Friday, the boards of the subsidiaries “will need to assess their options, including local reorganisation procedures, and obligations under the applicable Austrian law,” the company said.

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