Steinhoff Signs Austrian Deal With Signa After Days of Haggling

JOHANNESBURG (Capital Markets in Africa) – Steinhoff International Holdings NV signed off on the sale of Austrian furniture retailer Kika/Leiner and real estate assets to billionaire Rene Benko’s Signa Holding GmbH.

Steinhoff is selling the retail companies for a nominal amount, and the properties for a price “based on an enterprise value” of 490 million euros ($570 million), subject to adjustments, the group said in a statement. Steinhoff accepted a conditional offer from Signa last week pending due diligence. There are still several exit clauses for the Austrian group.

Keeping Kika/Leiner “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,” Steinhoff acting Chief Executive Officer Danie van der Merwe said in the statement.

Steinhoff is trying to plug a cash-draining hole with the deal, as it has been trying to restructure the unprofitable Austrian business amid fierce competition from bigger rival XXXLutz and Sweden’s Ikea. Kika/Leiner’s fate has hung in the balance since credit insurers withdrew guarantees for its suppliers earlier this month.

Since reporting financial irregularities late last year, Steinhoff has kept retail businesses around the world in operation even as its share price plunged more than 95 percent and liquidity dried up. While most creditors this month agreed to a standstill agreement on the bulk of 9.6 billion euros of debt, Kika/Leiner’s situation worsened.

Signa and Steinhoff had planned to sign the deal on Tuesday but it took them longer to convince Steinhoff’s creditors that it was a better outcome for them than a possible insolvency, people familiar with the situation said on Wednesday.

The 490 million-euro valuation for the properties is subject to “agreed balance-sheet adjustments (including in relation to any secured indebtedness),” according to the statement. The transactions also need approval from antitrust authorities in Austria, the Czech republic and Slovakia. Benko can still walk away from the property deal until Aug. 15 and only go ahead with the purchase of the retail operation. Closing is expected by the end of September.

Benko, a 41-year-old self-made billionaire who started earning money by renovating apartments in his hometown, Innsbruck, owns prime assets in Vienna and Germany, including Berlin’s famous KaDeWe department store and the “Golden Quarter” of luxury stores and hotels in Vienna’s inner city. He bought and restructured loss-making German department-store chain Karstadt in recent years.

Signa said the deal comprises about 100 properties in Austria and eastern Europe.

Source: Bloomberg Business News