South African-based Steinhoff International is in negotiations with creditors to stave off debt claims for three years, while the company restructures its significant debt.
The company has signalled the beginning of a consent process for a lock-up agreement; a major component of the company’s restructuring plans.
“The launch of the LUA (lock-up agreement) marks the culmination of several weeks of discussions with the ad hoc committees of third party creditors…and represents an important step in the restructuring process,” Steinhoff said in a statement.
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.
Should the lock-up agreement go forward the company will implement its restructuring plan within three months; the terms of which will remain in place for three years.
The deadline for the lock-up agreement was initially June 30, but was extended to allow creditors more time to respond.
In addition, Steinhoff noted that interest owed to creditors would not be paid until the lock-up agreement becomes effective.
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.
The conglomerate’s subsidiary, Steinhoff Asia Pacific, recently considered a name change in an effort to distance itself from its troubled parent company.
This story first appeared on sister site Inside Retail New Zealand.