Steinhoff announces key terms to revive Conforama fortunes. Photo: Supplied
DURBAN – Troubled retailer Steinhoff International has announced key terms to revive the fortunes of its struggling French subsidiary Conforama Holdings, which includes issuing warrants amounting to 49.9 percent of the issued share capital of Conforama.

This comes after Steinhoff reported last week that it would implement the financial restructuring of Conforama by raising €316 million (R45.97 billion) to ensure the stability of its capital structure and operations.

This was after the French Commercial Court of Meaux approved a conciliation agreement entered into between Conforama and its creditors that paved the way for refinancing negotiations to continue and be implemented.

The funds were expected to be available from yesterday.

Steinhoff said yesterday that it would issue warrants in an amount equal to 49.9percent of the issued share capital of Conforama Holding to the new money providers and the funders will also have “enhanced governance rights”.

“The money providers will have a right to appoint two independent directors to the board of Conforama Holding. The warrant issuance date is subject to certain milestones, but ultimately December 31, 2019, or in the event of a sale before that date,” Steinhoff said yesterday. Steinhoff said the refinancing also includes call protections, a protective provision of a callable security prohibiting the issuer from calling back the security for a specified period of time.

Steinhoff was thrown into financial instability after the group admitted to accounting irregularities in December 2017, causing more than 90 percent decline in the group’s share price, leaving it with a huge debt. The group has also lost more than R200bn in market capitalisation, with both 2017 and 2018 financial results still yet to be published.

Conforama’s net financial debt at the end of December was a staggering 1.72bn. Steinhoff acquired Conforama in 2011 for around R11.04bn in a bid to strengthen its presence in Europe. Conforama operates an extensive network across Europe, with stores in France, Spain, Portugal, Italy, Switzerland and Serbia.

Last week Steinhoff also announced that its deputy chief executive Alexandre Nodale and member of the management board has stepped down from both roles by mutual agreement.

However, Nodale will remain Conforama’s chief executive, a position he has held from January 2015, until the closing of a long-term financing of the French retailer.

BUSINESS REPORT