June 22, 2018 / 7:21 AM / 2 years ago

Steinhoff sells Austria properties to Benko's Signa in $570 million deal

BENGALURU/ JOHANNESBURG (Reuters) - Crisis-hit Steinhoff (SNHJ.J) will sell Austrian property assets valued at 490 million euros (428.3 million pounds) to tycoon Rene Benko’s Signa Holding, it said on Friday, the latest sale by the South African retailer following an accounting scandal.

Steinhoff has been battling to stay afloat since last December when it revealed holes in its accounts that sent its shares crashing and forced it into selling some of its assets to pay down debt and beef up its liquidity.

The deal also includes the sale for a nominal sum of the company’s 48 loss-making Kika/Leiner furniture stores to Signa. Their fate had been up in the air after credit insurers withdrew cover for its suppliers this month.

For cash-strapped Steinhoff, the deal offers some breathing space as it continues crunch talks with creditors about restructuring its roughly 9 billion euros debt pile.

“The withdrawal of credit insurance cover to Kika/Leiner created significant liquidity constraints for the Kika/Leiner businesses which would have placed significant further cash demands on the wider Steinhoff Group,” Steinhoff’s acting chief executive Danie van der Merwe said in a statement.

The transaction hands Austrian real estate investor Benko a major furniture player with roughly 800 million euros in annual sales but also one that needs an injection of cash to help return it to profit.

Targeting upmarket as well as price-conscious customers with a broad range of products, Kika/Leiner has a market share of around 20 percent in its home market.

Benko’s Signa runs more than 125 retail stores, including German department store Karstadt, and several online sports goods retailers, which it plans to list in autumn, according to sources.

It has not previously been involved in furniture retail.

Canadian department store operator Hudson Bay HBC.TO said in February it rejected a 3 billion euro bid from Benko for its German Kaufhof unit.

Steinhoff has already sold assets that include its stakes in South African industrial firm KAP Industrial and investment house PSG Holdings to pay down debt and inject working capital into its chains because lenders have cut off credit lines.

The company, once dubbed Africa’s IKEA, hopes to clinch a debt restructuring agreement with lenders by the end of the month. Steinhoff has so far said all its debt would be reinstated at par and be given a common maturity date of three years from the completion of the restructuring agreement.

Shares in Steinhoff were up 0.8 percent at 1.23 rand as of 1100 GMT, valuing it around 5.2 billion rand, a dramatic reversal in fortunes for the company that was worth 240 billion rand six months ago.

Additional reporting by Kirsti Knolle in Vienna; Editing by Edmund Blair/Keith Weir

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