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STEINHOFF INTERNATIONAL HOLDINGS N.V. - Update On Progress Of Financial Restructuring

Release Date: 31/05/2019 14:10
Code(s): SNH SHFF     PDF:  
 
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Update On Progress Of Financial Restructuring

Steinhoff International Holdings N.V.
(Incorporated in the Netherlands)
(Registration number: 63570173)
Share Code: SNH
ISIN: NL0011375019

Steinhoff Investment Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1954/001893/06)
JSE Code: SHFF
ISIN: ZAE000068367

UPDATE ON PROGRESS OF FINANCIAL RESTRUCTURING

Steinhoff International Holdings N.V. (the "Company" and with its subsidiaries, the "Group")

Introduction

In accordance with the Company's reporting obligations under paragraph (e) of clause 20
of the lock-up agreement between, among others, the Company, Steinhoff Europe AG
("SEAG"), Steinhoff Finance Holding GmbH ("SFHG"), Stripes US Holding, Inc. ("SUSHI") and
certain creditors, dated 11 July 2018 (the "LUA"), please see below the monthly update on
progress in connection with the corporate and capital restructuring of the Group's European
business (the "Restructuring").

Defined terms used but not otherwise defined in this report shall have the same meaning as
in the company voluntary arrangement in relation to SEAG (the "SEAG CVA") and/or the
company voluntary arrangement in relation to SFHG (the "SFHG CVA") (as applicable and as
the context dictates).

This report should be read in conjunction with recent market announcements (available at
www.steinhoffinternational.com/sens.php), including the most recent monthly update issued
on 29 April 2019 (the "April Update").

CVA Consent Request No. 3
On 17 May 2019, following extensive discussions between the Company, advisers to the SEAG
Creditors Group and the SFHG Creditors Group, the Company launched CVA Consent
Request No. 3 (available at www.lucid-is.com/steinhoff). CVA Consent Request No. 3 was
approved by the requisite majorities of SEAG and SFHG creditors on 30 May 2019.

In summary:

•   CVA Consent Request No. 3 contained a series of amendments and modifications to the
    SEAG CVA and the SFHG CVA (as applicable) and the relevant Restructuring Documents
    (the "Omnibus Amendments"). The Omnibus Amendments were considered necessary as
    a consequence of events since the approval of the SEAG CVA and the SFHG CVA in
    December 2018, in order to conclude the final outstanding matters and proceed to
    implementation of the SEAG CVA and SFHG CVA.

•   The Omnibus Amendments included amending the definition of the CVA Long-Stop Date
    to 5:00pm (London time) on 30 June 2019. This was considered necessary as, despite the
    Group's best efforts, and given the mechanical steps and prescribed notice periods
    required, not all of the relevant conditions precedent to, and/or the steps required in
    respect of, the implementation of the SEAG CVA and SFHG CVA would have been
    satisfied prior to the previous CVA Long-Stop Date of 31 May 2019. As a consequence of
    amending the CVA Long-Stop Date, the Long-Stop Date pursuant to the Lock-Up
    Agreement has also been amended to be the same as the amended CVA Long-Stop
    Date (i.e. 5:00pm (London time) on 30 June 2019).

•   A waiver was also sought in respect of the requirement to seek CRE Clearance from the
    Office of State Revenue in Western Australia as an Implementation Condition. Further
    background to the waiver request is detailed in CVA Consent Request No. 3.

Please refer to the announcements by the Company dated 17 May 2019 and 30 May 2019
for further information.

Implementation Conditions Notice and Entitlement Process

Following receipt of approval of CVA Consent Request No. 3, the remaining outstanding
Implementation Conditions (as detailed in the SEAG CVA and SFHG CVA (as applicable))
are being assessed.

Once the Implementation Conditions have been satisfied or waived (or SEAG or SFHG (as
applicable) considers that such Implementation Conditions are capable of being satisfied or
will be waived prior to the Implementation Commencement Date), SEAG and SFHG will send
the Implementation Conditions Notice which will commence the next stage of the
Restructuring.

The Implementation Conditions Notice will also commence the entitlement process and will
set the deadline (the Participation Deadline) by which relevant CVA Creditors and SFHG
Creditors must submit their Entitlement Letters in order to be eligible to receive their
entitlements under the New Lux Finco 2 Loans and/or New Lux Finco 1 Loans (as applicable),
and the date at which the exchange rate for conversion of non-Euro amounts into Euro
amounts for the purpose of calculating Final Entitlements will be set. Further information in
relation to the entitlement process will be detailed in the Implementation Conditions Notice
(which will be available at www.lucid-is.com/steinhoff).

SEAG and SFHG have been working with the Information Agent (Lucid Issuer Services Limited)
and the Group’s Financial Advisers (Moelis & Company UK LLP) to prepare for the entitlement
and allocation process. This has included liaising with financial creditors to confirm capital
and interest amounts outstanding as at 14 December 2018, building the model for the
entitlement process and liaising with creditors’ advisers as appropriate.

Reconciliation of Lock-Up Fees, Lock-Up Early Bird Fees and Support Letter Consent Fees

As previously reported, the Company has issued a guide which explains to creditors how their
eligibility to receive fees under the Lock-Up Agreement and Support Letters will be
reconciled and verified. Creditors and brokers are requested to review the guidance
provided and to take the steps set out in the "Instructions to Creditors and Brokers – Fee
Entitlements" guide which is available for download at www.lucid-is.com/steinhoff. This
process is separate to the entitlement process detailed above but the outcomes will form
part of the entitlement calculations.

KYC requirements

To also assist with the entitlement process, as previously reported, the agents under the New
Lux Finco 1 Loans and New Lux Finco 2 Loans have asked the Company to remind relevant
creditors of SEAG and SFHG to provide their KYC Documentation (if applicable) to the
relevant agent(s) as soon as possible to prevent any potential delay in receipt of Final
Entitlements resulting from incomplete KYC processes. The relevant creditors of SEAG and
SFHG should refer to the KYC notices issued by each of the agents under the New Lux Finco 1
Loans and the New Lux Finco 2 Loans which are available at www.lucid- is.com/steinhoff.

SEAG CVA and SFHG CVA – implementation steps following the Participation Deadline

As detailed in the SEAG CVA and the SFHG CVA, following the Participation Deadline, the
Information Agent (in consultation with the Group’s Financial Adviser) will have a prescribed
period to calculate Final Entitlements based on information received from SEAG, SFHG and
from creditors, including information received pursuant to the entitlement process.

Once this period has passed and “day 1” participants in the New Lux Finco 1 Loans and New
Lux Finco 2 Loans have been confirmed, and any remaining conditions to implementation
have been satisfied, the final implementation of the Restructuring will commence. It is
expected that closing (i.e. the Restructuring Effective Date) will occur approximately 20
Business Days after the date of the Implementation Conditions Notice.

Lock-Up Agreement Consent No.10

On 29 May 2019, the Company launched a request under the Lock-Up Agreement (Consent
Request No. 10). That Consent Request relates to matters which need to be resolved prior to
the conclusion of the Restructuring pursuant to the SEAG CVA and the SFHG CVA. This
includes matters relating to the disposal of an asset of APAC / Greenlit business and matters
relating to Steinhoff Risk Solutions Limited and a possible financial restructuring in relation to
the Blue Group as well as a consequential amendment to the Lock-Up Agreement.

Head office liquidity

The Company continues to actively monitor cash flows and manage other liabilities
(including contingent claims, tax and bilateral facilities) as well as funding needs that may
arise at the subsidiary level.

Recently SFHG instructed the sale of listed securities owned by it and has realised proceeds
of approximately EUR 37 million which will be used to support the liquidity position of the SFHG
Group.

Litigation

On 21 February 2019, the Company received a petition by a group of shareholders for inquiry
proceedings before the Enterprise Chamber of the Amsterdam Court of Appeal (the
"Enterprise Chamber"). The petition included a request to appoint an Investigator as well as
an additional member of the Supervisory Board of the Company whose role will include
oversight that information is provided to shareholders adequately together with any other
measures ordered by the Enterprise Chamber. A hearing was scheduled to take place on 23
May 2019. As announced on 22 May 2019, the Company and the group of shareholders
have mutually agreed to postpone the date of this hearing to a date later in the calendar
year. The date of the hearing will be communicated once it has been confirmed.

Separately, the Company and the investment group VEB/European Investors agreed to
extend the suspension of the collective action between them in The Netherlands.

Financial statements

On 7 May 2019 the Company published its audited consolidated financial statements for the
year ended 30 September 2017. The finalisation of the Group’s consolidated financial
statements for the year ended 30 September 2018 continues to progress well, and the results
remain scheduled to be released on Tuesday, 18 June 2019. As previously announced, the
Company decided not to hold a press conference or webcast for the 2017 results but will
schedule a combined presentation after the release of the 2018 results on a date to be
confirmed.

As previously announced, determining the appropriate accounting treatment and the
consequential impact of the accounting irregularities has proven to be exceptionally
complex and time consuming from both an accounting and audit perspective, and has
impacted the timetable for releasing the Company's financial statements for financial years
2017 and 2018. This delay in the publication of the financial statements has consequently
impacted the timing of the release of the unaudited 2019 interim results, which were
scheduled for 28 June 2019. The Company will update the market with a new date in due
course.

Update on Group Governance

As previously reported, the onboarding process between the Group and the nominees
identified for the Newco 3 board and the boards of the key intermediate holding companies
(in addition to the two directors nominated by the Company, Louis du Preez and Theodore
de Klerk) in the SEAG group is ongoing. The Group expects to announce the candidates
publicly prior to the Restructuring Effective Date.

Current management priorities

The key priorities for the management team currently include:

•   Determination of the date on which to launch the Implementation Conditions Notice
    and finalising the remaining outstanding Implementation Conditions and the final
    implementation steps in order to complete the Restructuring;

•   Finalisation of arrangements to appoint the nominees of the new management boards
    within the SEAG group;

•   Maintaining stability across the Group and managing the ongoing operations of the
    Group, including actively monitoring cash flows, supporting operating performance,
    managing other liabilities and funding needs that arise at the operating company level;

•   Finalising the 2018 Annual Financial Statements;

•   Continuing to consider the contents of the PwC report and to progressing various actions
    as appropriate together with the roll out of the Remediation Plan;

•   Monitoring and defending any litigation claims brought against the Group and
    identifying and pursuing recoveries where available; and

•   Engaging with the wider stakeholder group and regulators.

Shareholders and other investors in the Company are advised to exercise caution when
dealing in the securities of the Group.

JSE Sponsor: PSG Capital
Stellenbosch, 31 May 2019

Date: 31/05/2019 02:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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