Steinhoff Losing Credit Lines as Accounting Scandal Deepens

JOHANNESBURG (Capital Markets in Africa) – Embattled retailer Steinhoff International Holdings NV said lenders are starting to cut off support after an accounting scandal swept out its leaders and destroyed most of its value in a matter of days.

The owner of Conforama in France, Mattress Firm in the U.S. and Poundland in the U.K. isn’t yet able to assess the magnitude of financial irregularities disclosed two weeks ago, it said in a presentation to lenders in London on Tuesday. The South African company also said it didn’t know when it would be able to publish audited results for 2017 and 2016, nor whether additional years will need to be restated.

The shares resumed their plunge, slumping by more than 20 percent in Frankfurt to the lowest since Dec. 8 before paring losses to trade 12 percent lower as of 2:48 p.m. local time.

The presentation shows that the company is still grappling with the task of getting to the bottom of the crisis, which has led to the resignations of Chief Executive Officer Markus Jooste and billionaire Chairman Christo Wiese. Steinhoff said earlier Tuesday that Chief Operating Officer Danie van der Merwe, 59, had been made interim CEO to helm the recovery attempt, while Conforama boss Alexandre Nodale will serve as his deputy in a new four-member management board.

Steinhoff didn’t have “detailed visibility” of the cash flows of individual operating companies, it said in the same presentation. The units rely on the company for working capital and “the forecast position for each operating company is evolving daily,” it said. PricewaterhouseCoopers has been hired to investigate the accounts, while Alix Partners LLP is working on an analysis of the cash flow.

Steinhoff had outstanding debt of 10.7 billion euros ($12.7 billion) as of Dec. 14, the company said. Almost 4.8 billion euros of that was in Steinhoff Europe AG, an operation based in Austria. About 690 million euros in notional facilities have been rolled over to date, according to the presentation.

Source: Bloomberg Business News