DGAP-News: Steinhoff International Holdings N.V. : Update on Restructuring

Steinhoff - Update on Restructuring

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

The Company refers to its announcement earlier today (the "19 November Announcement") in respect of the launch of the CVA and Consent Solicitations (each as defined in the 19 November Announcement).

Further to the 19 October Announcement the Company is pleased to provide an update on the following:

- the launch of the CVA in relation to Steinhoff Europe AG ("SEAG");

- the launch of the Consent Solicitations in respect of Steinhoff Finance Holding GmbH ("SFHG") issued convertible bonds;

- the SUSHI Scheme; and

- an extension to the LUA under its terms.

The CVA and Consent Solicitations processes relate to the restructuring of debt at SEAG and SFHG and are not expected to have any impact on any of the Group's operating businesses, their landlords or trade creditors.

Launch of CVA in relation to SEAG

In relation to the lock-up agreement entered into by the Company on 11 July 2018 (the "LUA"), SEAG has today made a proposal for a CVA under Part 1 of the Insolvency Act 1986 (the "CVA Proposal") to Alan Bloom, Alan Hudson and Simon Edel of Ernst & Young, acting as nominees for the CVA Proposal (the "Nominees"). The Nominees will now proceed to review and consider the CVA Proposal and are expected (if they see fit) to issue a report to the High Court of England and Wales. Under the relevant UK statutory provisions, the Nominees have up to 28 days to consider the CVA Proposal. A further announcement will be made once the Nominees issue their report including an update on the timetable for the CVA Proposal.

Upon the issuance of the Nominees' report to the High Court, the CVA Proposal will be published to all creditors of SEAG, whereupon the creditors will have a period to review the CVA Proposal before voting on it. The CVA Proposal includes the following key aspects:

- the corporate holding structure of SEAG will be restructured with the incorporation of new Luxembourg, Jersey and UK incorporated companies as direct and indirect holding companies and subsidiaries of SEAG;

- at closing there will be a hive-down of almost all of the assets and liabilities from SEAG to certain of these newly incorporated Jersey and UK companies;

- SEAG's existing financial indebtedness will be refinanced by way of a new debt instrument issued by a newly incorporated Luxembourg company which shall sit as an indirect subsidiary of SEAG (the "New SEAG Luxco Debt");

- SEAG's existing financial creditors will be able to participate in the New SEAG Luxco Debt, such participations to have the benefit of a security package to be granted by the new SEAG corporate group;

- to the extent that SEAG's existing financial creditors currently benefit from a guarantee from the Company in respect of their holding of existing SEAG debt, such financial creditors will also receive the benefit of a new deferred contingent payment instrument to be provided by the Company in respect of the New SEAG Luxco Debt; and

- to facilitate completion of the financial restructuring, an interim moratorium will, subject to approval by SEAG's creditors of the CVA Proposal, come into force from the date of such approval and will have the effect that SEAG's creditors will be prohibited from taking certain enforcement action against SEAG from such date until the implementation of the financial restructuring or the termination of the CVA.

Further information will be contained in the CVA Proposal which when published, will include an anticipated timetable and will also contain instructions for SEAG creditors on the actions which they will need to take. A further announcement will be provided upon publication of the CVA Proposal.

Launch of Consent Solicitations in respect of SFHG issued convertible bonds

The Company has today launched Consent Solicitations in respect of the three series of outstanding SFHG issued convertible bonds due 2021, 2022 and 2023. Bondholder meetings for each series of bonds will, pursuant to the terms of the Consent Solicitations, be convened for holders to consider the extraordinary resolutions proposed by the Company. The date for those meetings has not yet been fixed. Each such extraordinary resolution includes the following key proposals:

- the restructuring of the convertible bonds as new indebtedness in the form of guaranteed secured loans with a three-year maturity and PIK interest terms. It is proposed that the loans so extended by holders of the convertible bonds due 2021 and 2022 would be restructured into a single loan facility and that the loans so extended by the holders of the convertible bonds due 2023 would be restructured into a separate loan facility, each with a new Luxembourg incorporated entity as the borrower. The 2021/2022 and the 2023 loan facilities will rank pari passu at borrower level;

- These loan facilities will benefit from deferred contingent payment instruments from in the case of the 2021/2022 loan facility, the Company and Steinhoff International Holdings Pty Ltd and in the case of the 2023 loan facility, the Company, reflecting the guarantor structure in relation to each existing series of convertible bonds;

- the new restructured indebtedness will take the form of private loan facilities and the convertible feature of the existing convertible bonds will be removed; and

- to facilitate completion of the financial restructuring, an interim moratorium will, subject to approval of SFHG's creditors of the Consent Solicitations, come into force from the date of such approval and will have the effect that SFHG's creditors will be prohibited from taking certain enforcement action against SFHG or the Company from such date until the implementation of the financial restructuring or the termination of the Consent Solicitations.

It is expected that detailed supporting documents for the Consent Solicitations will be provided to bondholders in due course to assist bondholders in considering the extraordinary resolutions. A further announcement will be provided once such long form documents have been circulated.

A requirement in respect of each of the CVA and Consent Solicitations processes is that completion of both exercises will be inter-conditional with each other.

Update on SUSHI Scheme

The Company refers to its announcement of 13 November (the "13 November Announcement") in respect of the SUSHI Scheme (as defined in the 13 November Announcement) having been sanctioned by the High Court of Justice in England and Wales. The Scheme Sanction Order was recognised in proceedings under chapter 15 of title 11 of the United States Code by the United States Bankruptcy Court for the District of Delaware on 13 November 2018. The Scheme Sanction Order (as defined in the 13 November Announcement) was lodged with the Registrar of Companies (within the meaning of the Companies Act 2006, as amended) on 16 November 2018, and the SUSHI Scheme was implemented in accordance with its terms.

Extension of LUA

The SUSHI Scheme having become effective and the CVA Proposal and Consent Solicitations processes having been initiated, the LUA is extended to 20 February 2019.

The Group restructuring otherwise continues in accordance with the terms of the LUA and the Company will continue to provide updates as appropriate.

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

Stellenbosch, 19 November 2018