Steinhoff International Holdings’ share price gained 10% yesterday after shareholders drew some comfort from plans to further firm up the restructuring plan of the group in their favour.
The debt-laden international retail group said yesterday its creditors were prepared to accept contractual contingent value rights (CVRs) for shareholders, as part of a Dutch restructuring plan for the group.
The share price traded 10% higher at 22 cents on the JSE yesterday afternoon, but it is still well below R2.90 that the share traded at a year ago, before it become apparent shareholders were likely lose much of the value of their stakes in a restructuring that favours the creditors.
CVRs rights typically ensure shareholders get certain benefits when a specific event occurs, usually within a specified time. Steinhoff’s board did not yet specify the details of the CVRs yesterday, but said this would be published “in due course” in an updated restructuring plan.
The restructuring plan in Dutch law allows for tailored-made restructuring to be implemented outside normal insolvency proceedings and it helps to preserve a debtors value at an early stage.
The group, which has a primary listing on the Frankfurt Stock Exchange and a secondary listing on the JSE, said yesterday that it had engaged with shareholders on the draft restructuring plan, and some of the suggested changes could only be introduced with consent from financial creditors.
Several of the largest financial creditors indicated that a material change to the plan would not be acceptable to them, but they would support CVRs, on condition they be allocated to creditors and shareholders, and that creditor CVRs will get to 80% of the economic interest in the restructured group, while shareholder CVRs will entitle their holders to 20% of such interest.
The restructuring plan followed the rejection last month by shareholders of a proposal to extend debt maturities, and cede 80% of the group’s shares to creditors and 20% to shareholders.
In 2017 the company made headlines for accounting fraud in what was said to be South Africa’s biggest corporate fraud, with its executives facing criminal charges. It has some R200 billion of debt, much of which falls due on June 30.
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