Fitch affirms Steinhoff, Unitrans

Fitch Ratings said it affirmed the A(zaf) national long-term and F1(zaf) short-term ratings of Steinhoff International Holdings Ltd. and Unitrans Ltd. following Steinhoff's offer to acquire from Unitrans its entire business as a going concern. Steinhoff, via its subsidiary Steinhoff Africa Holdings (Pty.) Ltd., currently owns 60.76% of Unitrans.

The outlook for both companies remains stable.

Under the proposed transaction, Unitrans minority shareholders will receive two Steinhoff shares for each Unitrans share on a yet-to-be-determined date. The agency acknowledged that the transaction will result synergies derived from intra-group opportunities globally, but said it considers the transaction to be rating neutral for Steinhoff due to the equity-funding for the acquisition.

Unitrans, although substantially smaller than Steinhoff, reflects stronger credit fundamentals, including a net debt-to-EBITDA ratio of 0.56x versus Steinhoff's net debt-to-EBITDA ratio of 1.78x, Fitch said, adding that Steinhoff's size, diverse product and geographical range balance its higher debt levels.

It is anticipated that Unitrans will be delisted, and Fitch said it understands that Steinhoff management will consider supporting Unitrans bondholders by way of a guarantee such that Unitrans bonds will be ranked equally with Steinhoff's existing bonds.

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