15225 replies to this topic

[Investment novice]

So realistically... Litigation victory in Sa
.... Conforama disposal...... Reduction in debt......... And positive cash flow......... Andi cummon... Whats your new valuation......

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[Tom]

The market value of Conforama’s real estate was valued at 1.02 billion euros (X about 0.67 to Conforama France) = 0.68 billion euros.

 

Conforama’s net financial debt was 1.72 + 0.356 = 2.076 billion euros X about 0.67 = 1.39 billion euros on Conforama France roughly.

 

Steinhoff got 0.07 billion euros (On the real estate of Conforama France valued at about 0.492).

 

So (unless there's other things) Steinhoff would have got up to about 1.39+0.07 = 1.48 billion euros for selling Conforama France (roughly).

 

So roughly Steinhoff bought Conforama (France) back in 2011 for 11x0.67 billion rands (about 0.68 billion euros that time), and sold it now for roughly about 1.48 billion eurs (after 9 years).

 

(Not sure how accurate are the numbers, including what values to give for exchange rates, depreciation, or appreciation).

 

I didn't add the two nominal sums Steinhoff gets, however the above is just rough numbers, and just quickly gathered to give some view to what Steinhof gets in return for selling the Conforama business units in France.

I assume those "nominal sums" won't make a big difference.

Edited by Tom, 09 July 2020 - 10:19 PM.

[Tom]

Are you sure about the debt? I think that the debt is intercompany debt and remains with the group.

 

SENS: 8 July 2020 12:00

Steinhoff – Disposal of Conforama France

"

The Disposal will secure the future of Conforama France, release the Group from its liabilities in

respect of that business and generate cash to reduce of the current debt held by Conforama
France.

"

https://irhosted.pro....aspx?id=363440

[Investment novice]

I think once the company provides clarity on the transactional it may result ina massive pump. Think the lack of clarity has everyone perplexed.


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[Zanme]

Are you sure about the debt? I think that the debt is intercompany debt and remains with the group.

[Tom]

The market value of Conforama’s real estate was valued at 1.02 billion euros (X about 0.67 to Conforama France) = 0.68 billion euros.

 

Conforama’s net financial debt was 1.72 + 0.356 = 2.076 billion euros X about 0.67 = 1.39 billion euros on Conforama France roughly.

 

Steinhoff got 0.07 billion euros (On the real estate of Conforama France valued at about 0.492).

 

So (unless there's other things) Steinhoff would have got up to about 1.39+0.07 = 1.48 billion euros for selling Conforama France (roughly).

 

So roughly Steinhoff bought Conforama (France) back in 2011 for 11x0.67 billion rands (about 0.68 billion euros that time), and sold it now for roughly about 1.48 billion eurs (after 9 years).

 

(Not sure how accurate are the numbers, including what values to give for exchange rates, depreciation, or appreciation).

Edited by Tom, 09 July 2020 - 09:40 PM.

[Tom]

I noticed there's an error in the article:

 

https://www.dailymav...ghts/#gsc.tab=0

 

It says there: "the sale of Conforama France for a “nominal” sum, as well as the sale of 18 real estate properties currently occupied by the business for about €70-million".

 

The article missed to say here that Steinhoff will benefit as the deal will "release the Group from its liabilities in respect of that business".

 

[DayTraderDad]

"As new management teams at Steinhoff and Tongaat slowly but steadily repair the damage done to these companies, the law may yet catch up with the perpetrators":

https://www.dailymav...ghts/#gsc.tab=0

Thanks Tom very interesting. So authorities after the implicated directors, shareholders after directors so I hope they have a bottomless pocket.

[Tom]

"As new management teams at Steinhoff and Tongaat slowly but steadily repair the damage done to these companies, the law may yet catch up with the perpetrators":

https://www.dailymav...ghts/#gsc.tab=0

Edited by Tom, 09 July 2020 - 06:14 PM.

[Investment novice]

I had previously reduced holding and moved a significant portion to ascendis. I now got a large chunk cheaper than I Disposed. Fortune favors the brave.

The risk with litigation... This is extremely interesting... What quantum is in SA and what quantum is in Germany..

SA precedent has been set..... This creates back peddling and opportunity to get a cents on the Rand settlement....and steinhof themselves irrespective of the quantum... They can sue for all losses and too may get cents to the Rands...

All in all can consider... This a better than yesterday situation....

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[Tom]

CFO last week said that Steinhoff isn't technically insolvent from the cash flow point of view.

[andi222]

I'm not sure that we should read too much into this statement. It is factually correct at this stage but the embedded value of the subsidiaries is why we are all still here and why the team have not given up over the many years. Everyoen stands to benefit if Steinhoff can navigate its way out of this mess and for me this seems more and more of a realistic prospect.

 

Sleepwa123, if you look at one of my post a few days ago I have listed the points why I believe management is trying to show by every possible and legal manner that they are close to liquidation. 

This strategy also involves things like saying we are close to liquidation if we cannot settle the claims etc. for the media. Also all this negative media stating Steinhoff is bankrupt etc is part of the plan I think. Also a lot of people have asked me why they haven't booked in any provision for legal claims, this would have clearly made the picture even worse. But obviously if management would have booked in any provisions for legal claims, they would have admitted that a claim is valid. 

 

In Germany, where Steinhoff has one of its primary listings a law exists that states as soon as a company is insolvent they need to apply for business rescue immediately. If management does not do this and they are actually insolvent management can be held liable and they would receive huge penalties. Also the auditor needs to report any bankruptcy that is delayed immediately. So currently they are still fine and if management plans works out and Steinhoff survives with some operating units left the share price will go up. But this process takes time.

[Sleepwa123]

I'm not sure that we should read too much into this statement. It is factually correct at this stage but the embedded value of the subsidiaries is why we are all still here and why the team have not given up over the many years. Everyoen stands to benefit if Steinhoff can navigate its way out of this mess and for me this seems more and more of a realistic prospect.

[Zanme]

https://www.moneyweb...old-grim-stuff/

[andi222]

The group’s chief financial officer Theodore de Klerk says calls for liquidation of the group might seem reasonable but that option is significantly complicated by the many claims facing Steinhoff. What does this suggest that after the billions that they splurged on consultants and themselves they want to liquidate the Group?

 

Can you please share the reference where he has said this? Thanks

[Zanme]

It seems to becoming frighteningly clearer that Steinhoff is being run for management creditors litigants and consultants benefit and has been since Markus stepped down. Shareholders get a nice glossy set of results that's all.

[Zanme]

The group’s chief financial officer Theodore de Klerk says calls for liquidation of the group might seem reasonable but that option is significantly complicated by the many claims facing Steinhoff. What does this suggest that after the billions that they splurged on consultants and themselves they want to liquidate the Group?

[DayTraderDad]

Hi DTD, only Conforama France has been sold. So Conforama Holding is still part of the Steinhoff group and unfortunately the 1.7 billion intercompany loan still lies with Steinhoff.

 

Now looking at the sale of Conforama France. 

The sales price will be at 1 € 

Additionally Steinhoff will receive 70 Million € for properties.

 

So what will the impact be for Steinhoff.

- First of all another big operating loss making unit will be disposed off. In 2019 Conforma France has generated a loss of around 200 Million € plus impairments of properties. So here going forward Steinhoff will not incur these losses anymore. 

- In addition they have sold 18 locations for 70 Million. I'm pretty sure these where not all locations. The total fair value of all properties in France was lying at around 600 Million. So I think they still have 180 locations left in the Conforama Holding. So the 70 Million doesnt seem bad and I think that these were sold at fair value otherwise the lenders would have not approved the deal.

- Now looking at the debt levels. It seems like Conforma France has debt of around 180 Million which will be taken over with the deal. 

 

So all in all it looks like a decent deal even though sold for a nominal value.

 

What would be the alternative for Steinhoff if they would not have sold:

- The would still sit with a business generating huge losses even after years of restructuring which didn't bring any benefit.

- Steinhoff would have had to pump in an additional 350 Mil € see SENS to keep France running.

 

Open items which I do not understand fully yet is the new loans which they have just received last year where they issued warrants. 

Interesting to note is the following on the warrants:

An Exercise Event, that would trigger the conversion of the warrants into Class 2 Preference Shares, includes any of the following events:

• Listing, partial exit or change in control of Conforama;

• Voluntary or involuntary liquidation of Conforama;

• Any distribution by any nature whatsoever by Conforama for the benefit of shareholders; or

• Six months prior to 29 May 2029.

 

So I'm not sure yet if the sale was an excercisable event. If yes the warrants will be converted to pref shares and Steinhoff would loose control of 49% of Conforama. I do not have enough info on this to make a call on this.

 

I think/hope they can also exit the remaining Conforma business. The Conforama business has alone brought 660 Million € of losses for Steinhoff in the 2019 AFS and its sitting there with a huge negative NAV. 

 

We will only see the impact in the 2020 annual results unfortunately. Hopefully Steinhoff will already classify Conforma France as an held for sale asset in the Half year results which are due end of this month.

Hi Andi many thanks for the great post. Yes in my calculation the 1.7 bil was taken into account.

[andi222]

From what i am reading looks like Confo taking all debt and SNH taking the intercompany which if I am correct is about 1,7 bil. Andi can you confirm.

 

So for me this is the story:

 

Corporate debt excluding SINVH is: 8873

 

Less cash:     1795

 

Less Assets for sale: 1445

 

Net debt: 5633

 

EBITDA at 2021: 1200

 

DEBT/EBITDA: 5

 

Reasonable bedt able to be supported: 6000

 

Sale of PEPCO share will be to cover interest.

 

All done. Lets enjoy the ride.

 

Andi and Captain your thoughts

 

Hi DTD, only Conforama France has been sold. So Conforama Holding is still part of the Steinhoff group and unfortunately the 1.7 billion intercompany loan still lies with Steinhoff.

 

Now looking at the sale of Conforama France. 

The sales price will be at 1 € 

Additionally Steinhoff will receive 70 Million € for properties.

 

So what will the impact be for Steinhoff.

- First of all another big operating loss making unit will be disposed off. In 2019 Conforma France has generated a loss of around 200 Million € plus impairments of properties. So here going forward Steinhoff will not incur these losses anymore. 

- In addition they have sold 18 locations for 70 Million. I'm pretty sure these where not all locations. The total fair value of all properties in France was lying at around 600 Million. So I think they still have 180 locations left in the Conforama Holding. So the 70 Million doesnt seem bad and I think that these were sold at fair value otherwise the lenders would have not approved the deal.

- Now looking at the debt levels. It seems like Conforma France has debt of around 180 Million which will be taken over with the deal. 

 

So all in all it looks like a decent deal even though sold for a nominal value.

 

What would be the alternative for Steinhoff if they would not have sold:

- The would still sit with a business generating huge losses even after years of restructuring which didn't bring any benefit.

- Steinhoff would have had to pump in an additional 350 Mil € see SENS to keep France running.

 

Open items which I do not understand fully yet is the new loans which they have just received last year where they issued warrants. 

Interesting to note is the following on the warrants:

An Exercise Event, that would trigger the conversion of the warrants into Class 2 Preference Shares, includes any of the following events:

• Listing, partial exit or change in control of Conforama;

• Voluntary or involuntary liquidation of Conforama;

• Any distribution by any nature whatsoever by Conforama for the benefit of shareholders; or

• Six months prior to 29 May 2029.

 

So I'm not sure yet if the sale was an excercisable event. If yes the warrants will be converted to pref shares and Steinhoff would loose control of 49% of Conforama. I do not have enough info on this to make a call on this.

 

I think/hope they can also exit the remaining Conforma business. The Conforama business has alone brought 660 Million € of losses for Steinhoff in the 2019 AFS and its sitting there with a huge negative NAV. 

 

We will only see the impact in the 2020 annual results unfortunately. Hopefully Steinhoff will already classify Conforma France as an held for sale asset in the Half year results which are due end of this month.

[Tom]

I think the current low share price on Steinhoff is because of the lockdowns uncertainty, even though 95% of Steinhoff's operations were open and trading, which is more than other companies, still the stock market are keeping their bad outlook on Steinhoff unchanged.

Edited by Tom, 08 July 2020 - 08:06 PM.