Steinhoff considers more disposals


Steinhoff considers more disposals

Published Date: 2019-08-14 | Source: Stephen Gunnion | Author: Stephen Gunnion

Steinhoff considers more disposals

The furniture retailer says its only hope for survival is to become a pure investment holding company focused on the retail sector.

Steinhoff says it's considering selling more non-core businesses as efforts to save the business continue. Presenting a turnaround plan to investors in Cape Town yesterday, CEO Louis du Preez said the group's only hope for survival was to become a pure investment holding company focused on the retail sector.

The global furniture group has been under pressure since admitting to financial irregularities in December 2017, sending its share price reeling. Financial statements for its 2017 and 2018, released over the past few months, revealed large losses. Its 2019 interim accounts showed a reduced loss of €571 million for the six months to end-March. A 15-month forensic investigation by PwC uncovered fraudulent transactions of more than R100 billion between 2009 and 2016.

When it released its interim results, it said its ability to continue as a going concern beyond the foreseeable future was in doubt unless it was given enough time to stabilise its business and reestablish value at an operational level. This would allow it to realise assets in a non-distressed fashion and maximise value to reduce debt to manageable levels.

While turnover from its businesses remained strong, it said profitability remained a challenge. Its financial restructuring is aimed at stabilising its business and providing stability until the end of 2021, while it deleverages. Debt remained at around €9 billion at the end of March, including €5.6 billion owed by Steinhoff Europe AG, €2.8 billion by Steinhoff Finance Holding and €400 million by property subsidiary Hemisphere.

Since the end of March, it has disposed of properties under its Hemisphere business and sold shares in investment group Brait. Pepkor Europe is well advanced in a refinancing process and a restructuring plan for French furniture chain Conforama, announced last month, will result in store closures and retrenchments.

The group said while further forensic work had been initiated, including investigation possible claims against third parties, it didn't expect any further impact on its financial statements. It said it was also exploring possible strategic solutions to legal proceedings initiated against it by shareholder groupings in the Netherlands, Germany and SA, the Amsterdam Enterprise Chamber and various vendors, mostly in SA.

The group is due to hold its annual general meeting on 30 August. After early gains, its shares turned around to close 3.9% lower at R1.24 yesterday.

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