DGAP-News: Steinhoff International Holdings N.V. : HEMISPHERE RESTRUCTURING UPDATE

HEMISPHERE RESTRUCTURING UPDATE

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

Commercial agreement on Hemisphere Restructuring

The Company refers to its announcement of 29 June 2018 noting that discussions regarding a potential restructuring of the financial indebtedness of Hemisphere International Properties B.V. ("Hemisphere" and the "Hemisphere Restructuring", respectively) were ongoing, and that the Company would provide an update to the market in due course.

Following recent discussions, the principal indicative commercial terms for the Hemisphere Restructuring have been finalised with the advisors representing the third-party creditors of Hemisphere (the "Hemisphere Lenders") and has been provided to the Hemisphere Lenders for their approval. At the same time, it is being provided to the third-party creditors of Steinhoff Europe AG and Steinhoff Finance Holding GmbH ("SFH") pursuant to the lock up agreement referred to in the Company's announcement of 11 July 2018.

A high-level overview of the term sheet for the Hemisphere Restructuring (the "Hemisphere Term Sheet") is set out below. The overall objective of the terms agreed are to provide Hemisphere with a long-term stable platform to realise its assets and maximise recoveries for all its stakeholders.

If the Hemisphere Lenders' approval is obtained, the expected next step is that Hemisphere will negotiate with the Hemisphere Lenders on the terms of a lock-up agreement (the "Hemisphere LUA") with respect to the implementation of the Hemisphere Restructuring in accordance with the Hemisphere Term Sheet. The Hemisphere LUA will be designed, among other matters, to impose an agreed standstill obligation on the Hemisphere Lenders to facilitate the implementation of the Hemisphere Restructuring by providing Hemisphere and its stakeholders with a period of stability whilst the relevant documents are negotiated, and arrangements are put in place to implement the Hemisphere Restructuring.

A further update will be provided to the market when negotiations regarding the Hemisphere LUA have concluded.

Overview of the Hemisphere Term Sheet

The Hemisphere Term Sheet sets out the terms on which the EUR750 million revolving bridge facility between Hemisphere (as borrower), the Company (as guarantor) and certain third-party creditors (the "Existing Facility") is to be refinanced by a new senior secured term loan financing (the "New Facility"). Aside from locally secured facilities, the Hemisphere Group's (as defined below) only material external financial indebtedness is the the Existing Facility.

Hemisphere group structure

Hemisphere has agreed to make certain structural changes to its sub-group (the "Hemisphere Group"). These include:

- a new intermediate holding company ("Topco") to be inserted into the Hemisphere Group as the sole subsidiary of Hemisphere; and

- a second new intermediate holding company ("Holdco") to be inserted below Topco which will hold 100% of the shareholdings in each of Hemisphere's current subsidiaries as are currently held by Hemisphere.

Terms of New Facility

- Principal amount

- Principal amount of EUR750million plus accrued and unpaid interest, the rollover and extension fee detailed below and any other outstanding amounts under the Existing Facility.

- Principal amount will be immediately reduced by the proceeds of any prepayments under the Existing Facility that have been made by Hemisphere prior to the date on which the New Facility becomes effective (the "Closing Date", which is expected to be no later than 3 August 2018).

- Rollover and Extension Fee

- The lenders under the New Facility (the "New Lenders") will be entitled to a 3% rollover and extension fee of EUR22.5 million which will accrue and be treated and capitalised as part of the outstanding principal amount under the New Facility.

- Maturity

- Maturity is 3 years from the date of implementation and completion of: (i) the Hemisphere Restructuring; and (ii) the restructuring of the financial indebtedness of the Company, Steinhoff Europe AG, Steinhoff Finance Holding GmbH ("SFH") and Stripes US Holding Incorporated, subject to a maturity long-stop date of 31 December 2021.

- Interest

- 10% per annum, payable in cash on a "pay if you can" basis in accordance with the terms of the New Facility, including a semi-annual cash-sweep.

- Any interest not paid in cash will be payable as PIK interest which will compound and capitalise on a semi-annual basis.

- Undertakings

- Hemisphere undertakings to include an undertaking to:

- agree the terms of a disposal plan (the "Agreed Disposal Plan") with the requisite majority of New Lenders (the "Majority Lenders", being 66 2/3% of the New Lenders by commitments) within 3 months of the Closing Date and to provide an updated disposal plan every 6 months thereafter; and

- to market and implement the disposals set out in the Agreed Disposal Plan.

- All disposals to require Majority Lender consent, save for de minimis exceptions or disposals where the consideration is at least the price agreed in the Agreed Disposal Plan.

- No obligor to agree any amendment or waiver to any lease documentation (subject to materiality threshold) or documentation relating to the disposal of the Kika/Leiner property holding companies (the "KL Propcos") without Majority Lender consent.

- Hemisphere Group intercompany claims

- All debt owed by any member of the Hemisphere Group to any other member of the Hemisphere Group to be subordinated but freely payable until the occurrence of an event of default.

- NV Guarantee

- From the Closing Date, the Company will guarantee the New Facility in an amount equal to EUR750 million plus: (i) the rollover and extension fee of EUR22.5 million; and (ii) accrued and unpaid interest as at the Closing Date and associated fees (the "NV Guarantee" and "Guaranteed Amount").

- The NV Guarantee will remain outstanding until the New Lenders receive payments equal to the Guaranteed Amount plus PIK interest of 10% per annum to the date of repayment (the "Guarantee Recovery Cap").

- The Company can make cash pay outs against the NV Guarantee which will reduce the Guaranteed Amount and the principal amount outstanding under the New Facility by that amount.

- Creditor recoveries under the NV Guarantee and the New Facility are capped at an amount equal to the Guaranteed Amount.

- The amount paid under the NV Guarantee shall not exceed the Guaranteed Amount and the NV Guarantee will be released once the New Lenders have been paid an amount (including PIK and cash interest on the New Facility) equal to the Guaranteed Amount and interest up to the Guarantee Recovery Cap.

- New guarantors

- Guarantees to be provided by each member of the Hemisphere Group (including Holdco and Topco) in respect of the New Facility (with the exception of the KL Propcos which will only accede as guarantors if the disposal of the KL Propcos does not proceed).

- Security

- Expected to include 1^st ranking security over:

- the assets of Hemisphere, Topco and Holdco (including, without limitation, shares, receivables and bank accounts);

- the entire issued share capital of Topco, Holdco and each member of the Hemisphere Group; and

- asset and share security from each other member of the Hemisphere Group.

- Make whole

- If any part of the New Facility is prepaid in whole or in part as a result of any refinancing (including but not limited to any form or debt or equity refinancing) at any time prior to the date falling 18 months after the Closing Date, Hemisphere shall pay to the New Lenders all accrued and unpaid interest on the prepaid amount as at the date of prepayment, plus an amount equal to interest that would have accrued on the part of the New Facility that is prepaid from the date of prepayment to the date falling 18 months after the Closing Date, discounted at a rate to be agreed.

- Solvent wind down

- All of Hemisphere's key stakeholders (including the New Lenders, SFH and the Company) have agreed a solvent wind down of Hemisphere.

SFH intercompany claim

- There are ongoing steps pursuant to which Hemisphere and SFH are seeking confirmation as to whether certain intercompany payables from Hemisphere to SFH (the "SFH Claims") are (i) valid; and (ii) if valid, whether such claims should be subordinated to the New Facility.

- If the SFH Claims are found to be valid and rank pari passu:

- the claims will benefit from the terms applicable to the New Facility (e.g. in relation to interest, guarantees and the rollover and extension fee);

- where prepayments have been made in respect of the New Facility which: (i) have not been paid pro rata on the SFH Claims; and (ii) such prepayments exceed EUR228,334,614, a catch-up payment on the SFH Claims will be required; and

- following the catch-up payment, all future disposal proceeds will be paid on a pro-rated pari passu basis across the New Facility and the SFH Claims.

Hemisphere governance

- The Hemisphere board shall consist of a majority of independent directors (the identity of such directors to be acceptable to the Majority Lenders, acting reasonably).

- The Company will be entitled to appoint a non-voting observer to the Hemisphere board.

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

Stellenbosch, 19 July 2018