Steinhoff to sell $1.2bn in convertible bonds

Johannesburg - Furniture group Steinhoff [JSE:SHF] will sell bonds worth $1bn convertible into stock to fund share buy backs, it said on Thursday.

Steinhoff, which operates in Africa, Europe and Australia, set the conversion price at 103.4 per share, about 35% premium to its current price and at the bottom-end of an earlier announced range.

Shares in Steinhoff were 1.1% lower at R76 by 14:25 GMT, reflecting the dilutive impact of the bonds.

If all bonds are exchanged for shares, they would add about 150 million new shares and dilute the existing shareholding by about 4.1%.

The 2022 bonds carry a coupon of 1.25%, at the upper-end of what Steinhoff had aimed for and is payable twice a year.

Steinhoff, rated Baa3 with a stable outlook by Moody's, said it has made substantial progress towards its proposed listing on the Frankfurt Stock Exchange.

Steinhoff has been seeking a listing in Europe, where it makes the bulk of its profits, to enhance its capital structure.