Steinhoff’s Wiese in Talks for Standstill on LoanBy and
Retailer hires Moelis, AlixPartners amid accounting problems
Investec faces credit exposure after stock, bond plunge
Steinhoff International Holdings NV Chairman Christo Wiese, seeking to stabilize the embattled retailer, is negotiating a standstill agreement on a 1.5 billion-euro ($1.8 billion) margin loan under which banks would suspend the sale of stock until next year, according to people with knowledge of the discussions.
The owner of Mattress Firm in the U.S. and Poundland in the U.K. needs a lifeline after its stock plunged last week when it delayed publication of its financial results because of possible accounting irregularities that prompted the resignation of Chief Executive Officer Markus Jooste.
Wiese, a South African billionaire who’s Steinhoff’s biggest shareholder, is stepping up efforts to save the company, which owes creditors as much as $21 billion. The shares rebounded Monday after Steinhoff said it appointed Moelis & Co. to handle discussions with lenders and AlixPartners LLP to advise on “liquidity management and operational measures.”
Last year, Wiese pledged 628 million of Steinhoff’s shares as collateral to borrow money from Citigroup Inc., HSBC Holdings Plc and Nomura Holdings Inc. That was to participate in a share sale in conjunction with Steinhoff’s acquisition of Mattress Firm and Poundland, according to a company statement.
Banks’ current exposure to the debt is around 1.1 billion euros after they realized a quarter of the loan by triggering margin calls before last week’s selloff, a person familiar with the matter said.
Bank of America Corp., BNP Paribas SA, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are also lending banks on the margin loan, the people said. Representatives for BNP Paribas and UBS were not immediately available for comment. The other banks declined to comment.
The lenders are considering waiting until the publication of Steinhoff’s audited results, said the people, who asked not to be identified because the plan is confidential. An accord could come as early as this week and involve new terms for the loan though no final decisions have been made and plans could still fall apart, the people said. Wiese declined to comment.
The retailer “is currently fully focused on safeguarding operational liquidity to continue funding existing operations throughout its various subsidiaries,” Steinhoff said in a statement late Sunday. “The group is asking for and requires continued support in relation to existing facilities.
On Friday, after its shares and its bonds plunged, Steinhoff postponed by a week a crucial meeting with lenders that was set for Monday. Investec Plc said Monday that it has credit and derivative exposure to Steinhoff, without specifying the amount.
Steinhoff’s shares closed up 24.4 percent after gaining as much as 30 percent in Frankfurt, where the company has its primary listing. Last week’s freefall wiped out a majority of the net worth of Wiese and an investment by the Public Investment Corp., which manages the pension funds of South African government workers.
The company had been on an acquisition spree since Wiese bought into the company via the sale of his African chain of Pep stores in 2014. Wiese, 76, is now valued at $1.8 billion, compared with $4.4 billion on Tuesday, according to the Bloomberg Billionaires Index.
— With assistance by John Bowker, Ambereen Choudhury, Stefania Spezzati, Gavin Finch, and Stephen Morris