Homestyle rescued by £100m share placing

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The Independent Online

Homestyle, the heavily indebted group behind Bensons Beds, was thrown a £100m lifeline yesterday by a South African furniture company that will control the company after a highly dilutive share placing.

Steinhoff International Holdings, one of Homestyle's suppliers, is supporting a cash call that will wipe out £85m of debts at Homestyle and stop the group from falling into the hands of its bankers.

Homestyle warned yesterday that unless shareholders supported the refinancing "its auditors may have concerns about the group's ability to continue as a going concern".

Without backing, the group "may not have sufficient working capital to meet its present requirements. The implications of this would be severe and would be likely to significantly diminish shareholder value," it added. Shares in Homestyle, which have halved since January, rose 2.5p to 61.5p.

Steinhoff, whose European interests include Relyon, a bed maker, and Norma, a Dutch mattress manufacturer, could own up to 74 per cent of Homestyle after the share placing.

The South African group, which has sought dispensation from the Takeover Panel to prevent it from being forced to issue a takeover offer for the remaining stock, is taking 117 million of the 191 million new shares being issued at 55p each. It is also underwriting the remaining 75 million on offer to shareholders on a 12 for 11 basis.

David Brock, Homestyle's executive chairman, said Steinhoff had no interest in taking the company private. "They are a supplier and manufacturer, not a retailer," he said.

Although Steinhoff will have two representatives on Homestyle's board, Mr Brock said the South African group would not exert any influence on how his company was run. "Steinhoff want this to be run as an independent business. If we end up not buying a penny from them, so be it," he added.

Steinhoff has been linked with Homestyle since the Jersey-based company Formal Property Management Services emerged with a 5 per cent stake. The same company appeared on the shareholder register of Australia's Freedom Furniture just months before it was acquired by Steinhoff. Mr Brock denied that Steinhoff had any links with FPMS.