Steinhoff International says that “work remains” to ensure that Mattress Firm has the working capital it requires.
Mattress Firm’s capital needs, identified at $200 million in December, have not yet been met, Steinhoff indicated in a quarterly report on its businesses.
It singled out Mattress Firm in a discussion of businesses for which “work remains to be done to ensure that the group and its operating businesses have the required working capital.”
Those comments were made by Heather Sonn, the company’s acting chair.
She said that following the announcement in December of accounting irregularities at Steinhoff, the resignation of the company’s CEO and the launching of an independent forensic investigation, the group’s “essential working capital, especially in its businesses outside of South Africa, largely dried up as the access of our operating businesses to their banking facilities and other credit lines was severely constrained.”
Sonn said the company has had several update meetings with its lenders and credit insurers in December and January.
“The majority of the group’s international operating subsidiaries have now arranged their own working capital facilities and these local financings, together with the release of funds from the group’s South African operations and certain limited non-core asset sales, have largely addressed the group’s near-term liquidity needs,” Sonn said.
“However,” she continued, “given the ongoing cash needs of the group’s operating businesses (in particular Mattress Firm in the U.S.) and the fact that the group has, in most part, agreed not to access undrawn amounts under its European credit facilities, work remains to be done to ensure that the group and its operating businesses have the required working capital. Discussions with our various lender groups, at both South African and international level, are continuing.”
Mattress Firm said in December that it needed an investment of $200 million to meet its strategic plans for its 2018 fiscal year. It announced later that month that it had secured an asset-backed credit facility with the availability of $75 million and the potential full availability of $225 million.