Steinhoff bondholders said to offer loan as part of bankruptcy filing

A group of Steinhoff International Holdings [JSE:SNH] bondholders may inject about $300m (about R4.4bn) into the retailer’s troubled US bedding unit Mattress Firm as part of a bankruptcy filing, according to people familiar with the matter.

The range offered for the loan may be as low as $250m (about R3.7bn) or more than $350m (about R5.2bn), according to the people, who asked not to be identified because the negotiations are private. The move is part of Mattress Firm’s plans to file for bankruptcy, with this expected soon, one person said.

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Steinhoff last month said it was assessing ways to attract extra funding for Mattress Firm to execute a turnaround. A spokesman for the company declined to comment beyond what the company presented in a September 20 lenders presentation. The payment-in-kind note will carry a 12% interest rate, one of the people said.

Mattress Firm needs “incremental liquidity” for its recovery to be secured, Steinhoff said in the presentation to creditors. Bought for $3.8bn (about R56bn) two years ago, Mattress Firm has emerged as a headache for Steinhoff as it strives to shore up liquidity following an accounting scandal.

The 3 300-store chain expanded too aggressively, suffered from ineffective marketing and has been embroiled in a dispute with suppliers, Steinhoff said.

The bedding company has hired restructuring advisers including AlixPartners and Guggenheim Securities, along with law firm Sidley Austin. The Wall Street Journal reported the loan earlier.