JOHANNESBURG - Troubled retailer Steinhoff International has finally admitted that it is selling its loss-making Austrian furniture retailer Rudolf Leiner, popularly known as Kika/Leiner, and real estate assets to Rene Benko’s Signa Holding.
The proposed value of the transaction was not disclosed by the group. Rumours have been circulating in the past few weeks that it is considering selling its Austrian unit, but the group had been tight-lipped until Friday when it announced the sale.
Steinhoff acquired Kika/Leiner in 2013 as part of its strategy to bulk up across Europe. Kika/Leiner has 70 stores in Austria and other parts of Europe.
Steinhoff said in January that the group had taken steps to assist the Kika/Leiner business to formulate a restructuring plan with the objective of restoring its operating and financial performance and to set a course for it to continue as a going concern.
“The Kika/Leiner business is currently loss-making and placed significant cash demands on the wider group.
“Further, any turnaround plan for Kika/Leiner would have required significant new investment from the group over a number of years,” it said in explaining its decision.
In parallel with these discussions, the group’s management team have been engaging with third parties with a view to agreeing the terms of a sale of the Kika/Leiner operating companies and property holding companies.
Steinhoff said that following the discussions they had with a number of interested parties, certain group companies have accepted a conditional offer from Signa Holding, subject to the entry into final transaction documents.
International credit insurers of suppliers to the Kika/Leiner businesses decided to withdraw their credit insurance cover at the beginning of the month.
“While the group considers it has been making good pro-
gress with the turnaround since the agreement of the Kika/Leiner restructuring plan, the international credit insurers of suppliers to the Kika/Leiner businesses decided to withdraw their credit insurance cover at the start of June 2018.
“This withdrawal of support from credit insurers placed significant further liquidity constraints on the Kika/Leiner businesses and, in recent days, the Kika/Leiner businesses have seen this uncertainty result in a weakening of customer confidence,” the group said.
The group added that following the withdrawal, it had held discussions with Kika/Leiner’s creditors, suppliers
and credit insurers in an attempt to secure their continued support for Kika/Leiner’s operations, which had not been successful.
Steinhoff has been decimated in the past seven months. This comes after the group admitted to accounting irregularities in December. The share price has declined by more than 95percent.
On Friday, the shares closed 3.2percent lower on the JSE at R1.21.
Faced with a debt of 10.4billion (R161.8bn) as at the end of March, the group has sold some stakes in the companies they have shareholdings in.
In South Africa the group has reduced its stakes in the PSG Group, KAP Industrial Holdings and Steinhoff Africa Retail (STAR) to plug some of the liquidity shortfall.