Steinhoff International has proposed a new revolving credit facility for its Mattress Firm unit Stripes in the US. File Image: IOL
JOHANNESBURG - Steinhoff International has proposed a new revolving credit facility for its Mattress Firm unit Stripes in the US as part of the bedding company's ongoing bankruptcy proceedings.

Steinhoff yesterday told shareholders that the credit facility would ease the unit's financial woes.

Stripes owes its creditors at least R2.9 billion.

Three weeks ago, Steinhoff said Mattress Firm, together with its US subsidiaries, was taking steps to implement a pre-packaged plan of reorganisation through the voluntary filing of cases under Chapter 11 of the US Bankruptcy Code.

The group said it would close more than 25percent of its units in the US as part of a major restructuring plan aimed at offloading some businesses and re-base its books, after Mattress Firm filed for bankruptcy protection and was selling nearly 700 stores of its estimated 3200 stores in Delaware as part of a pre-packed strategy that would bring in new financing to the bed division.

“In conjunction with the Mattress Firm filing, Mattress Firm also secured certain financing arrangements that come into effect upon completion of the implementation of the plan of reorganisation and Mattress Firm's exit from the Chapter 11 proceedings that are intended to support its business going forward,” the group said yesterday.

On Wednesday, the High Court of Justice in England and Wales granted Stripes US Holding (Sushi), a direct subsidiary of Steinhoff Europe, permission to convene a scheme meeting for the creditors affected by the English scheme of arrangement proposed by Sushi for the purpose of considering and, if thought fit, approving the Sushi scheme.

The group said Sushi currently had a revolving credit facility under which it owes certain lenders about $200m (R2.9bn).

“Pursuant to the Sushi scheme, it is intended that with the Sushi revolving credit facility, lenders will exchange their rights under the Sushi revolving credit facility for substantially similar rights under a new revolving credit facility,” the group said, adding that restructuring would continue.

The Sushi Scheme is expected to become effective next month.

Steinhoff shares closed 2.93percent lower on the JSE at R1.99 yesterday.