When faced with a fraud accusation, executive departures and liquidity issues, Steinhoff’s creditors looked to FTI Consulting to provide clarity on trading performance and help preserve value through a restructuring.
Steinhoff is a South Africa-based retail conglomerate with 12,000 retail outlets, 130,000 employees globally and well-known brands such as Mattress Firm, Poundland, Pepco and Conforama.
In December 2017, Steinhoff announced an investigation into accounting irregularities and the resignation of the CEO, and also warned against the recoverability of €6 billion of assets outside of South Africa. The Group’s share price plummeted by over 80% (losing €14 billion of market cap), and credit lines began to be withdrawn at the Group’s operating companies, resulting in significant operational and liquidity pressure.
Steinhoff urgently needed new money and sought relief from its creditors in respect to £10 billion of debt. Steinhoff was at a critical inflection point that would determine the future of its business.
FTI Consulting was appointed Financial Advisor to the Co-ordinating Committee of the Group’s creditors to provide a common information platform regarding independent reviews of Group operating companies, as well as financial advisory services in what developed to be a highly complex multi-jurisdictional debt restructuring involving four distinct restructurings, multiple creditor constituencies, Chapter 11, COMI shifts, CVAs and Schemes of Arrangement. FTI Consulting’s team mobilized in a global and coordinated effort to provide lenders with clarity on Steinhoff’s true trading performance, offer a clear opinion of the future trading prospects and deliver a robust restructuring plan that provided a stable platform to restructure the Group’s debt and deliver a solvent solution to return value to lenders.
After providing the analysis and advice to creditors, FTI Consulting was the architect of the restructuring. FTI Consulting drove the restructuring implementation and negotiation, which resulted in over 90% of creditors (100+ financial institutions) locking in to a restructuring agreement within six months.
Senior Managing Director, London
Q: How did FTI Consulting’s global platform help support the outcome of this engagement?
A: “Steinhoff was a global conglomerate with significant operations in South Africa, Australia, the United States, the UK, France, Spain, Austria, Germany and Poland. Its lending bank syndicate reflected its global business. Large global situations require FTI Consulting to bring in expertise from its global platform in a seamless and joined-up approach, as clients want to ensure that each country is covered by a local FTI Consulting team with local expertise to leverage local market insights, language skills, cultural alignment and local market relationships. However, clients need one point of contact taking full responsibility for the client service delivery with immediate effective access to and response from the global team. FTI Consulting’s global platform enabled that level of support on this complex engagement.”
Senior Director, London
Q: What was it like working on an engagement that received significant global media attention?
A: “While the parent company may not be a household name globally, the Group’s operating businesses are some of the most recognizable retail businesses worldwide. Understanding not just the pressures in the various local jurisdictions but also from a global perspective made this a particularly interesting engagement to be a part of. Within the restructuring market, this engagement was by far the largest and most complex transaction of the year, which provided invaluable exposure to an industry we operate in.”
Senior Consultant, London
Q: What did you learn from this engagement that you may not have known or been involved in before?
A: “This was my first engagement at FTI Consulting and within restructuring. The engagement provided great exposure to wide range of colleagues in different offices and segments, as well as a range of financial institutions. My key takeaway from this project was gaining an understanding of how the work we perform at FTI Consulting impacts the decision-making of creditors and delivery of a successful restructuring.”