Steinhoff: Is bankruptcy off the table?

Steinhoff, the retail giant that was embroiled in an accounting scandal in 2017, seems to be on a path to recovery. The company recently released its 2020 year-end results, showing promising signs of improvement, especially in its European operations. Steinhoff CFO, Theodore de Klerk, discussed the company's current status and the steps being taken to address its debt and legal challenges in an exclusive interview with CNBC Africa. De Klerk highlighted the resilience of Steinhoff's operations in the face of the COVID-19 pandemic. Despite a 20% decrease in revenue compared to the previous year, the company's main operations remained profitable. As non-essential retailers, Steinhoff faced store closures worldwide, but managed to weather the storm and emerge relatively strong. However, Steinhoff still grapples with a significant debt burden and ongoing litigation stemming from the accounting fraud scandal. De Klerk emphasized the importance of resolving these issues before the company can fully stabilize. He mentioned ongoing negotiations with litigants and expressed optimism about reaching a solution that would pave the way for Steinhoff's financial recovery. One key aspect of Steinhoff's strategy involves the implementation of 'cram down' processes in the Netherlands and South Africa. These processes aim to bring all litigants to the table and secure court approval for a comprehensive settlement. De Klerk provided a timeline for the court hearings in both jurisdictions, indicating progress towards a resolution. Despite facing more than 90 separate legal claims, Steinhoff's focus remains on addressing the majority of these claims through the ongoing processes. De Klerk acknowledged that there may be some claimants outside of the current framework, but stressed that the company is actively engaging with creditors to reach a mutually beneficial agreement. In terms of regulatory matters, Steinhoff has cooperated with authorities and paid fines to the JSE. De Klerk stated that the company continues to assist regulators where necessary, but refrained from providing specific details on the progress of individual cases. Looking ahead, Steinhoff's African operations, primarily under Pepkor Limited, have shown resilience despite challenges posed by the pandemic and currency devaluation. With a presence in 10 African countries and 5,000 stores, the company remains optimistic about the future of its business in the region. Overall, Steinhoff's journey to recovery hinges on successfully navigating its debt restructuring and legal challenges. The company's ability to reach a settlement with litigants and stabilize its operations will be key in determining whether bankruptcy can be avoided. As Steinhoff progresses towards a resolution, stakeholders watch closely to see if the retail giant can reclaim its former stability and reputation in the market.