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Investors rush to get in on Steinhoff's KAP share sale

Mar 14 2018 11:52
Carin Smith

Cape Town - Less than 24 hours after announcing it has decided to sell part of its stake in KAP Industrial Holdings, Steinhoff International Holdings [JSE:SNH] reported it had raised R3.667bn.

On Tuesday the Stellenbosch-headquartered retailer said in a note to shareholders that it had decided on an accelerated bookbuild offering to place up to 450 million ordinary shares in KAP Industrial Holdings [JSE:KAP].

In an update on Monday evening, Steinhoff said it had successfully placed the placing shares at a price of R8.15 per placing share. The placing price represents a discount of 4.1% to the KAP closing price on Monday.

According to Steinhoff, the book of demand was multiple times oversubscribed.

The placing shares make up approximately 16.7% of KAP’s issued share capital, and will reducing Steinhoff’s interest in KAP from about 43% to about 26%.

Settlement of the placing is expected to occur on Friday, 16 March 2018.

According to Steinhoff, its shareholding in KAP had created material value to Steinhoff shareholders since 2012. And while the global furniture conglomerate said it continues to view KAP as a "compelling investment case", it was looking to sell the shares in order to settle certain debt obligations.

The placing shares were offered to qualifying institutional investors only. Steinhoff said the placing did not constitute an offer to the public to purchase any shares.

Debt

At the end of February Steinhoff said in a quarterly market update that it was continuing to take steps to refinance or redeem debt within its SA operations.

The conglomerate has been facing liquidity issues since early December, when its former CEO Markus Jooste abruptly stepped down after the group's auditors flagged financial irregularities in its books.

These irregularities are the subject of an on-going forensic probe by PwC.

Steinhoff's senior management, including former chair Christo Wiese, briefed Parliament last month on the financial irregularities that caused the conglomerate's share price to fall by over 80% since December 5, erasing roughly R200bn in shareholder value. Wiese told the parliamentary committee that the problems at Steinhoff came like a "bolt out of the blue" to him.

By mid-morning trade on Wednesday, Steinhoff shares were down 1.18% at R4.20 per share.

KAP shares, meanwhile, were trading at R8.49, down 0.5% at 11:30. 

Bloomberg reported on Wednesday that while Steinhoff may look like a non-starter for most investors, buyers "have piled in", betting that the global retailer must have enough assets to offset losses they still don’t know about.

The definite overview of Steinhoff's financial situation is expected to be outlined in the PwC report. 

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