Steinhoff reveals debt reduction sell off plan
Troubled South African retailer Steinhoff plans to sell 6 per cent of its domestic Steinhoff Africa Retail operation to reduce debt.
Steinhoff International Holdings announced on Thursday morning it had raised R3.75bn by selling 5.8% of its shares in Steinhoff Africa Retail Limited, or STAR.
This after the embattled conglomerate launched an accelerated book build offering of 200 million ordinary STAR shares to help refinance debt. This stock sale took place with the Stellenbosch-headquartered retailer still under a cloud related to the valuation of the company and the management of its finances.
Steinhoff, which owns 77 per cent of Steinhoff Africa Retail, is fighting for survival after discovering accounting irregularities in December, knocking its share price by about 90 per cent and leading to the departure of its chief executive and chairman.
The multinational, which has more than 40 retail brands that include Conforama in France, Poundland in the UK and Mattress Firm in the US, said it would sell 200 million shares, or a 6 per cent stake, in Steinhoff Africa Retail via an accelerated bookbuild – reducing its holding to 71 per cent.
Its present 77 per cent stake in Steinhoff Africa is worth R50 billion ($4.1bn) and the deal could bring in about R4 billion ($333m), bankers said.
“Steinhoff continues to view (Steinhoff Africa Retail) as a strategic investment,” the company said.
Steinhoff Africa Retail was hived off from the group last year to achieve a higher rating for Steinhoff assets in developed markets and give emerging markets focused investors an opportunity to invest in the Africa-exposed business.
Steinhoff plans to use the proceeds to help fund the early repayment of its $1.3 billion South African bond. Last month, the company raised $300 million from the sale of a 17 per cent stake in KAP Industrial as part of efforts to fund debt repayments.