Steinhoff added that definitive transaction documents had now been entered into for the sale of the Kika/Leiner operating companies and property holding companies to Signa Holding.
The group said the consideration for the PropCos is based on an enterprise value of 490million (R7.65billion), which is subject to certain agreed balance sheet adjustments, while the disposal of OpCos will be based on a nominal amount.
Steinhoff International acting chief executive Danie van der Merwe said the withdrawal of credit insurance cover to Kika/Leiner created significant liquidity constraints for its businesses, which would have placed significant further cash demands on the wider Steinhoff group, given the businesses are both loss-making and require significant investment to implement the turnaround. “Signa was founded 18 years ago and has become a European leader, comprising both Signa Retail and Signa Real Estate. Signa has prior restructuring experience in the retail sector with Karstadt, and as such offers the Kika/Leiner business, its suppliers, customers and employees the support required at this time,” Van der Merwe said.
He added that Steinhoff would like to thank the Kika/Leiner management team and all the employees of Kika/Leiner for their loyalty and hard work during this very difficult time for the group. Kika/Leiner’s problems worsened when international credit insurers of suppliers to the Kika/Leiner businesses decided to withdraw their credit insurance cover at the beginning of the month.
Steinhoff believes that both companies will be better served under the Signa stable, which has operations in 127 locations across Europe.
Steinhoff said the sale of the OpCos is conditional upon merger clearance being received from the competition authorities in each of Austria, the Czech Republic and Slovakia on or before the long-stop date of September 30.
“It is acknowledged in the OpCos sale and purchase agreement that Steinhoff Europe is released from all support commitments it had to the OpCos,” the group added.
The parties have a deadline of January 2, 2019, for the conclusion of the deal.
However, the acquisition comes with a condition of both parties stating that if closing of the transaction has not occurred on or before January 2, either party may decide to terminate the sale and purchase agreements in respect of the PropCos.
Steinhoff was hard hit by the accounting scandal of December last year, in which the group admitted to accounting irregularities.
Former chief executive Markus Jooste stepped down after the scandal broke as the group's share price declined by more than 95percent, and by more than R200bn in market capitalisation.
The share price responded positively to the news on Friday on the JSE as it was up by 2.46percent to R1.26 a share.