Steinhoff signals investor support difficulties

Steinhoff-Horslepy-Park-renderSouth African-based Steinhoff International has extended the ‘early bird fee deadline’ of its recently announced lock-up agreement twice in the space of three days; signalling potential difficulties in acquiring necessary investor support.

The ‘early bird fee deadline’ was pushed back from an initial date of July 16th to the 17th, with the company today moving the date further to the 18th (London time).

“Positive progress is being made and the Group is aiming to obtain, as soon as possible, the requisite support levels under the LUA,” reads a company statement released to investors.

The incentives for creditors eligible for the ‘early bird fee’ vary depending on their relationship with the company, but range from pro-rata shares of 0.5 per cent to 0.85 per cent of all locked up debt (relating to the companies the creditor themselves are involved with), less fees payable.

“The Lock-Up Early Bird Fee…shall be capitalised and added to the principal amount of the reinstated debt…upon implementation and completion of the Restructuring,” the company set out in its initial unveiling of the LUA.

The company signalled the beginning of a consent process for the LUA last week, hoping to stave off the significant debt claims during the restructuring process. As part of the consent process, creditors have the choice to back the plan, determining whether the lock-up agreement goes forward or, if sufficient creditor support is not obtained by July 20, the Steinhoff board will need to reassess its options.

Pushing the ‘early bird fee’ further toward the final date may have been done in an effort to provide further incentive to creditors who have not yet pledged support for the LUA; or to not penalise those who haven’t yet jumped on board.

The deadline for the LUA was initially June 30, but was extended to allow creditors more time to respond.

Late last year, the company came under investigation on potential fraud charges, with shares dropping 80 per cent in the aftermath of the claims signalling the beginning of a difficult period.

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