JOHANNESBURG – Steinhoff’s African business is preparing to repay $1.2 billion it owes to its parent, it said on Friday, a move that would go a long way to plugging a liquidity hole in the group fighting for survival in the wake of an accounting scandal.
Steinhoff, the owner of more than 40 retail brands including Conforama, Mattress Firm and Poundland, is seeking to raise $2.4 billion to shore up its finances.
More than $10 billion has been wiped off Steinhoff’s market value in the last two weeks following its disclosure of accounting irregularities and its chief executive’s exit.
Steinhoff Africa Retail, spun off this year, said it had appointed FirstRand’s Rand Merchant Bank to arrange the refinancing of about 16 billion rand ($1.19 billion) in shareholder loans from the parent company.
Reuters had reported on Tuesday that Steinhoff was also considering selling its stakes worth $1.4 billion in PSG Group and the KAP Industrial to fill the hole in its balance sheet.
Steinhoff is working with turnaround specialist AlixPartners to help maintain its liquidity.
REGULATOR PROBES CONDUCT
South Africa’s Independent Regulatory Board for Auditors (IRBA) is investigating Steinhoff’s auditor following the retail group’s disclosure of accounting irregularities, it said on Friday.
“This entity (Steinhoff) is audited by Deloitte South Africa, who has confirmed that it will fully cooperate with the IRBA during the investigation,” the body’s chief executive Bernard Agulhas in a statement.
The accounting scandal has led to the resignation of both Chief Excutive Markus Jooste and chairman and top shareholder Christo Wiese, figures who played a key role in transforming Steinhoff from a modest furniture distributor to a global household goods giant, vying with the likes of IKEA.
Wiese, who stood in as chief executive last week, stepped down on Thursday to reinforce independent governance and address any possible conflict of interest.
Steinhoff named Heather Sonn, a member of the supervisory board and its independent sub-committee, as acting chairperson.
The crisis has tarnished Wiese’s credentials as one of South Africa’s most respected stewards of shareholder capital, stripped him of his billionare status and reduced his 22.8 percent stake in Steinhoff to 20.5 percent.
Banks have sold 98.4 million shares they used as security to lend Wiese 1.6 billion euros ($1.89 billion) to fund the purchase of additional shares in Steinhoff in September 2016.
Steinhoff did not name the bank or banks that have exercised their security rights over the stock. Citigroup, Goldman Sachs, HSBC and Nomura provided financing, which was backed by 628 million shares, or 15 percent of the company.
Steinhoff, which moved its primary share listing from Johannesburg to Frankfurt two years ago, has been under investigation for suspected accounting fraud in Germany since 2015. Four current and former managers are under suspicion of having overstated revenues at subsidiaries, prosecutors said.
It has previously said that the investigation related to whether revenues were booked properly, and whether taxable profits were correctly declared.
The German-listed shares fell a further 8 percent on Friday.