Retailers Sheinhoff’s South African lenders have backed a move to prop up its troubled European operations with liquidity from healthier South African subsidiaries as the group scrambles to close a funding gap.
A first instalment of €60 million of a total €200 million it is seeking will be received this week, Steinhoff said in a statement on Thursday, adding it was seeking consent for further instalments.
“It is expected that any funds so received will be available to meet business critical payments during the next phase of the group’s stabilisation plan,” it said.
Sources close to the negotiations told Reuters last week that Steinhoff was racing to plug a €200 million euro funding gap to avoid a small unit such as Austrian-Leiner pulling down the entire group.
“To date, additional external liquidity has not been obtained in the time available given the complexity of the Group structure and the terms of the existing financings, although additional external liquidity may be required in the future,” Steinhoff said on Thursday.
It said it would ask its creditors in the coming weeks to relinquish some payments that are coming due under existing financing arrangements for its European business.
The group last month admitted “accounting “irregularities” as it built a debt-fuelled empire stretching from Poundland in Britain to Mattress Firm in the United States. The admission wiped about $15 billion, or 85%, off its market value.