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Steinhoff’s US arm files for voluntary bankruptcy

Publish date: 08 October 2018
Issue Number: 794
Diary: IBA Legalbrief Africa
Category: Finance

Steinhoff’s cash-strapped US operation, Mattress Firm, has filed for voluntary bankruptcy as part of a restructuring that will result in up to 20% of its 3 400 stores closing and the sale of 49.9% of the business to funders who are providing $525m to support the restructuring. A Business Day report says the restructuring – which comes just more than two years after Steinhoff paid $2.4bn for 100% of the largest mattress retailer in the US and took on its $1.4bn debt – includes the repayment of $84m to Steinhoff and its release from loan guarantees to Mattress Firm. The August 2016 acquisition was given the thumbs up by the market despite the payment of a premium of 115% for the debt-laden mattress retailer. The deal was the last major transaction by Steinhoff before reports of accounting irregularities in December 2017 led to a 95% slide in its share price within a matter of weeks, wiping more than R190bn off its market capitalisation. On Friday, Mattress Firm said it expected to complete its restructuring in 45 to 60 days and to get court approval to close as many as 700 stores before year’s end. It is hoping the liquidity boost from the bankruptcy and the release from unattractive leases will help it deal with a more competitive market place, which now includes an aggressive Internet-based challenge.

Full Business Day report