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Steinhoff to consider reducing stake in African unit

Johannesburg

STEINHOFF International Holdings NV is considering the sale of part of a 58 billion rand (S$6.4 billion) stake in its separately listed African operations as the crisis-hit retailer looks to shore up liquidity, according to two people familiar with the matter.

A disposal would follow the South African company's sell-down of shareholdings in PSG Group Ltd and KAP Industrial Ltd, which have raised more than US$1.2 billion since an accounting scandal wiped 90 per cent off Steinhoff's share price. The owner of Conforama in France and Mattress Firm in the US is in talks with lenders about how to stay in business, and has sought to raise funds from non-core operations.

The sale of shares in Steinhoff Africa Retail Ltd would come through an accelerated bookbuild, said the people, who asked not to be identified as the discussions are still private. The move needs to be approved by South Africa's financial regulator and may yet be abandoned, they said.

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The 77 per cent stake is too large to be sold in one go and the company will initially look to offload a small portion, according to the people.

Steinhoff has announced plans to refinance or redeem debt financing within the South African operations and is considering its options of how to pursue that strategy, a spokeswoman said in an emailed response to questions. STAR, as the African retailer is known, has agreed to gradually repay about 16 billion rand of debt owed to its parent and chief financial officer Riaan Hanekom told shareholders last week that the process is far advanced.

STAR shares declined as much as 2.2 per cent in Johannesburg, and traded 0.3 percent lower at 9:35 am local time. Steinhoff rose 1.8 per cent in South African city and closed 5 per cent lower on Monday in Frankfurt, where it moved its primary listing in 2015. BLOOMBERG