Steinhoff - A long forgotten question
All,
Please find our updated analysis here.
As per thesis, the sector with the strongest growth is the most hated - retail. But as Steinhoff continue growing at 3x the pace its bonds can PIK, we begin to wonder about a probably foolish and vastly premature question: If there is another meaningful delay to the Grand Settlement, will the point come when the equity is actually worth something again?
Not the plan:
- Yes, yes we are aware that the combined will of the creditors and the boards they inserted is to restructure and take the equity for themselves / sell the assets piecemeal - we are ‘invested’ in the SFH bonds ourselves. But the-sum-of-the-parts is coming to a point where the debt is EV-covered. So with another year of such growth and the world awash with liquidity, shareholders could theoretically begin to claim some participation in a new topco arrangement going forward.
Difficult to imagine:
- So I am just asking the question to hear anybody else’s comments on the subject. Is there any conceivable scenario in which the equity ends up being worth buying - in blocks presumably / if at all possible?
Positioning:
- We remain long Steinhoff via both SFH bonds for 6% of NAV each.
Wolfgang
E: wfelix@sarria.co.uk
T: +44 203 744 7003