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Steinhoff's Mattress Firm secures $75m credit facility

Dec 29 2017 12:21
Jan Cronje

Cape Town - Mattress Firm, a US subsidiary of Steinhoff, has secured a new $75m (R920m) credit line from Barclays Bank, which may increase to $225m (R2.7bn). 

The announcement comes amid earlier warnings by Steinhoff [JSE:SNH] that the credit facilities of its 40-odd subsidiaries are increasingly “being suspended or withdrawn by lenders” in the wake of the abrupt resignation of its CEO Markus Jooste, a share price collapse and an independent investigation into its books. 

In a media statement, Mattress Firm said the new credit facility shows the group is on a sound footing. It said it would be used for working capital needs and other general corporate purposes.

“The company intends to upsize the facility via an incremental availability feature to a total aggregate principal amount of up to $225m,” it said. 

“This new credit facility provides independent liquidity and capital to support our strategy, and demonstrates the strength of our business, the value of our assets and the quality of our brands,” stated Ken Murphy, Mattress Firm’s president and CEO.

Steinhoff acquired Mattress Firm for $3.8bn in September 2016, in it largest foray into the US market. The mattress and bedding retailer has 3 300 stores in 49 US states.

The Stellenbosch-headquartered furniture and household goods conglomerate's share price has fallen by some 90% since December 5, erasing about R180bn in market capitalisation.

At a share price of R4.63 at 11:58 on Friday, the company's market cap is currently below R20bn.

Taking credit 

Since its share price entered a downward spiral, Steinhoff has been attempting to reassure lenders that its subsidiaries' businesses are fundamentally sound.

About 40 brands in 30 countries fall under the larger Steinhoff umbrella, including Ackermans, Pep and Tekkie Town in South Africa, pan-European home furnishings company Conforama, and German furniture group Poco. 

Steinhoff
Steinhoff

Its new executive leadership team met for an update with major banks on December 19.

According to a presentation uploaded to Steinhoff’s website, one of the discussion points was that “credit facilities [are] increasingly being suspended or withdrawn by lenders”.

Mattress Firm chairperson Steve Stagner was part of the presentation, according to the document. 

Steinhoff has not yet provided an update on the outcome of the meeting, but Mattress Firm announced its new credit facility a few days after the meeting took place. 

It did not say whether the new credit facility was linked to the meeting.

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