Steinhoff - Missing Cat
All,
Please find our unchanged analysis here.
So another cat’s gone missing. This time it’s Titan, signatories to a settlement support agreement, but of course, things have moved on a bit since then. Steinhoff are very much in the hot phase of their SA Litigation Settlement hearings and the odd delay and postponement should come as no surprise. If pressure fails, Titan should be a party Steinhoff can reach a deal with - again.
Status Quo:
- The process has been opened on Friday in the Western Cape High Court in South Africa and creditor meetings for all three classes were initially planned for today. However, yesterday evening the court agreed to postpone the meeting for the contractual creditors to Thursday this week, because of a last-minute dispute between SIHPL and Titan.
- Christo Wiese’s vehicle has negotiated a complex package, simplifying its involvement at various levels of the Steinhoff Structure to primarily a contractual claim against SIHPL, to be settled for a five-year and six-month receivable.
- In the coming two days, therefore, SIHPL are trying to force Titan to support the Settlement Proposal on the basis of a previously signed 'settlement support agreement’.
View:
- Steinhoff are within touching distance of achieving a landmark deal that should transform the name from a fraud case to a mere complex financing case in need of a large debt/equity swap.
- As the Steinhoff total debt only begins to be EV covered, creditors remain likely to capture the equity going forward.
- However, as per our last mail, we are beginning to have (admittedly wild) thoughts about the value of the equity in the name, given the high rate of growth in all of Steinhoff’s subsidiaries has been outpacing the 10% PIK on most of the debt.
Positioning:
We remain positioned with 6% of NAV in each of the SFH notes with a view to benefiting from the settlement in particular via the A1s and from fundamental value appreciation in the A2s.
Wolfgang
E: wfelix@sarria.co.uk
T: +44 203 744 7003