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Steinhoff International Holdings, a South African retail company linked to billionaire Christo Wiese, saw its shares surge by over 13 percent on the Johannesburg Stock Exchange today as some investors rushed to buy up shares in the company.
The news comes after its market capitalization plummeted by more than $270 million last week. At the time of writing, Steinhoff’s shares were trading at $0.333 per share, giving it a market cap of $2.18 billion.
The recent volatility in Steinhoff’s share price was sparked by an agreement with its largest creditors to extend the maturity of its debt from June 30, 2023, to at least June 30, 2026.
The company’s board stated that this extension will provide a good platform for reducing debt and financing costs in the wake of its 2017 accounting scandal, which resulted in around 90 separate legal claims against the company.
While the proposed transaction terms are subject to final approval and implementation, Steinhoff is seeking support for the agreement from its financial creditors and shareholders.
If the shareholders agree to the extension, they will retain 20 percent of the economic interest in the company’s post-closing equity.
Steinhoff has been struggling financially since the 2017 accounting scandal, which led to the resignations of CEO Markus Jooste and Wiese. The company has been working to recover from the crisis and reduce debt, with CEO Louis du Preez leading the efforts to rebuild the company.
Wiese, Steinhoff’s largest shareholder in 2017, is a South African billionaire and retail tycoon who played a key role in the growth and expansion of Shoprite, Africa’s largest retailer. Shoprite has annual sales of over $9 billion and employs around 142,000 people across the continent.
Despite the challenges it has faced, Steinhoff remains a key player in the global retail industry. With operations in over 30 countries, the company generates billions in revenue each year and employs thousands of people around the world.
While the road to recovery may be long and difficult, the extension of the maturity period of its debt could be a crucial step in the company’s efforts to get back on track.
