| Thu 12 May 2005, 12:10 | | Steinhoff - Steinhoff international Holdings Limit |
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Steinhoff - Steinhoff international Holdings Limited International Equity
Offering
Steinhoff International Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/003951/06)
JSE Code : SHF : ISIN : ZAE000016176
(`Steinhoff`)
Proposed Acquisition of Significant Interest in Homestyle Group plc
Introduction
Steinhoff is pleased to announce that its wholly-owned subsidiary, Steinhoff
Europe AG, has reached agreement, subject to the conditions precedent outlined
below, to acquire an interest of between 45% and 73.7% in UK-listed Homestyle
Group plc (`Homestyle), for a maximum cash consideration of GBP105 million (the
`Acquisition`).
Terms of the Acquisition
The Acquisition will be implemented through the participation of Steinhoff in a
refinancing exercise to be undertaken by Homestyle (the `Refinancing`).
In terms of the Refinancing, Steinhoff will invest a maximum of GBP105 million
in Homestyle. Part of this investment will be structured as a series of firm
placings of Homestyle shares for cash amounting to GBP64 million, which will
result in Steinhoff holding a minimum of 45% of the enlarged issued share
capital of Homestyle following the Refinancing. The remaining GBP41 million
will be structured as a placing of Homestyle shares for cash with Steinhoff
which placing will then be subject to existing Homestyle shareholders having a
right to claw-back under an open offer. The subscription price of the Homestyle
shares is 55 pence per share, a discount of 6.8% to the closing price of a
Homestyle share of 59 pence on 11 May 2005.
In the event that none of the Homestyle shareholders claw back their entitlement
under the open offer, Steinhoff would hold 73.7% of the issued share capital of
Homestyle.
In addition, Steinhoff will provide Homestyle with a GBP20 million loan
facility.
Following the Refinancing, Homestyle will retain its listing on the London Stock
Exchange and, in accordance with the rules of the London Stock Exchange, will
retain its independence from Steinhoff. Steinhoff will have the right to
appoint two directors to the board of directors of Homestyle.
Information regarding Homestyle
Homestyle is a UK-based furniture retailer listed on the London Stock Exchange
with a current market capitalisation of GBP40.2 million. The Group has two
divisions, the Beds Division and the Furniture Division.
The Beds Division operates from 440 outlets under three trade names: Bensons for
Beds, Sleepmasters and the Bed Shed. The division has a record of continuing to
achieve strong like-for-like sales and margin growth.
The Furniture Division trades under the Harveys brand. The division has
experienced significant change over the last 15 months with the appointment of a
new management team. A renewed emphasis on retail disciplines has contributed to
the creation of a stable platform from which to further develop the business.
Over the past few years, Homestyle has been severely constrained by a relatively
high level of indebtedness coupled with a difficult retail environment. For the
26 weeks to October 2004, Homestyle reported turnover from continuing operations
of GBP207 million, an operating loss from continuing operations of GBP2 million
and an after-tax loss of GBP5m.
Rationale for the Acquisition
Steinhoff has several furniture manufacturing and supply operations in the UK.
Its bed manufacturers, Relyon and Sprung Slumber, and upholstery distributor,
Steinhoff UK Furniture, supply a broad range of products to general furniture
specialists and national chain stores.
Whilst Steinhoff will continue to serve a broad range of retailers in the UK
market, it has recognised the rationale of developing a vertically integrated
platform in this market. The proposed investment in Homestyle will provide the
opportunity for Steinhoff to form a strategic relationship with a leading UK
retailer of furniture and beds.
Through the Acquisition, Steinhoff believes it will be able to assist in the
development and growth of a significant, existing customer of Steinhoff. In
addition to the existing bedding supply relationship Steinhoff has with
Homestyle, Steinhoff believes it will be able to supply a wide range of
furniture and household goods to Homestyle from Steinhoff`s network of own
manufacturing facilities and sourcing operations on terms that would be
beneficial to both parties.
Financial Effects
The Acquisition is not expected to have a significant impact on the pro forma
net asset value, net tangible asset value, earnings or headline earnings per
share of Steinhoff. However, given the substantial retail base of Homestyle,
significant opportunities exist in respect of future incremental business to
Steinhoff`s existing manufacturing and sourcing activities.
Conditions Precedent
The Acquisition of an initial 15% interest in Homestyle by way of the firm
placings of Homestyle shares for cash, is not subject to Homestyle shareholder
approval, although 5% of this interest is subject to finalisation and despatch
of Homestyle shareholder documentation.
The Acquisition of a further interest in Homestyle is subject to, inter alia,
the following:
* Finalisation and despatch of Homestyle shareholder documentation relating to
the Refinancing;
* Homestyle shareholder approval at an extraordinary general meeting to be
convened specifically for that purpose; and
* Given that, on completion, Steinhoff would hold more than 30% of Homestyle,
the Refinancing is also conditional upon the UK Panel on Takeovers and Mergers
waiving the requirement of the UK Takeover Code that Steinhoff make a mandatory
offer for the whole of the issued share capital of Homestyle. Such waiver by
the Takeover Panel is conditional upon the approval of Homestyle shareholders.
Wynberg
12 May 2005
Financial Adviser and Transactional Sponsor
Citgroup
Sponsor
PSG Capital
Date: 12/05/2005 12:00:36 PM
Produced by the JSE SENS Department
