Steinhoff rises on hope of damage limitation


Steinhoff rises on hope of damage limitation


Published Date: 2018-01-04 | Source: Stephen Gunnion | Author: Stephen Gunnion

Steinhoff rises on hope of damage limitation

While the group can't give an indication of when it will know the extent of its accounting irregularities, there is hope that they are confined to its European businesses

Steinhoff rallied as much as 39% yesterday on hopes that an accounting scandal at the furniture group was limited to its European operations. At their best, the shares traded at R6.95 from their previous close of R5.

On Tuesday, the group said a restatement of Steinhoff International and Steinhoff Investment Holdings' financial statements would be extended to include their 2015 accounts. Steinhoff Investment Holdings housed some of its European subsidiaries prior to a restructuring and listing on the Frankfurt Stock Exchange. However, importantly, it said the investigation would probably not extend to Steinhoff Services Limited, which has bonds listed on the JSE.

An independent committee of its Supervisory Board is busy scrutinising the company's European balance sheet assets to ascertain their validity. The committee is headed by African Rainbow Capital co-CEO Johan van Zyl. PwC was appointed last month as forensic investigators and it hired US investment bank Moellis & Company and management consultancy AlixPartners to advise it. It was unable to say when the review would be completed.

Its shares plunged 93% last year after CEO Markus Jooste quit after the company halted the release of its results after uncovering accounting irregularities. The fall came despite efforts to calm investors over its liquidity. Last month, it said it had received expressions of interest in some of its non-core assets that would release a minimum of €1 billion of liquidity. On top of that, subsidiary Steinhoff Africa Retail would formally commit to the refinancing of its long-term liabilities due to the company. Steinhoff said the additional liquidity of about €2 billion it would achieve through these measures would strengthen its balance sheet and provide additional comfort to stakeholders of its ability to fund its existing operations and reduce debt. The company said the investigation, validity and recoverability of certain of its non-South African assets amounted to about €6 billion.

Its shares closed 37% higher at R6.87 yesterday.


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