July 18, 2018 / 1:10 PM / a year ago

UPDATE 1-Steinhoff extends 'early bird' lock-up fee deadline for second time

(Adds details on restructuring plan)

JOHANNESBURG/FRANKFURT July 18 (Reuters) - Steinhoff extended for a second time on Wednesday the “early bird fee” deadline for creditors to sign a three-year agreement to hold off their debt claims, as the scandal-hit South African retailer battles to stay afloat.

Steinhoff wants to restructure its roughly nine billion euro debt after disclosing holes in its balance sheet that wiped more than 90 percent off its market value and forced it into asset sales to fund working capital.

The initial deadline was set for July 16, which was extended by 24 hours on Monday before being pushed back once again to 2200 GMT on Wednesday.

Creditors who sign up to the so-called lock-up agreement (LUA) within this time frame would qualify for an early bird fee.

“Positive progress is being made and the group is aiming to obtain, as soon as possible, the requisite support levels under the LUA,” Steinhoff said in a statement.

Steinhoff needs at least 75 percent of creditors to sign up by the final lock-up agreement deadline on Friday. Once enough creditors are locked in to the three-year deal, Steinhoff will begin restructuring its debt within three months.

The company has already agreed the main terms of a restructuring deal, under which all its debt would be restated at par and be given a common maturity date of three years from the completion of the restructuring agreement.

The debt would be eligible for an interest payment of 10 percent, capitalising twice a year but only paid out when it matures, a procedure dubbed payment in kind (PIK).

Some of the company’s external borrowings would be converted into secured debt, meaning it would be first to be paid should Steinhoff file for bankruptcy.

Creditors have also succeeded in pushing thorough corporate government changes. New heads have been brought in to run a new intermediate holding company, created in part to oversee Steinhoff’s litigation as well as planned asset sales.

The group’s Pepco unit is seen as one of the names next in line for divestiture, but a sale process is still months away and no sell-side advisor has so far been appointed, a source close to the matter said.

Last month Steinhoff struck a deal to sell its Austrian Kika/Leiner furniture and household goods retail unit, the latest in a series of asset sales.

Shares in Steinhoff were up 2.8 percent in Johannesburg. (Reporting by Tiisetso Motsoeneng and Arno Schuetze, Editing by William Maclean and Jan Harvey)

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