Steinhoff moves to provide ‘comfort’ on its liquidity after shares plummet

Dual-listed retail holding company, Steinhoff moved into damage control mode on Thursday as it attempted to assure investors of its liquidity amid rumours of debt issues.

Shares in the company have plummeted this week after its chief executive officer resigned on Tuesday evening amid accounting irregularities, rocking a company that’s rapidly expanded from its roots in South Africa into a retail empire spanning Australia, Europe and the US.

The owner of the France-based Conforama furniture chain, Mattress Firm in the US and Poundland in the UK said late Tuesday that CEO Markus Jooste quit as it appointed auditor PwC to probe the matter.

The stock slumped as much as 72% Wednesday in Frankfurt, wiping out more than 7 billion euros ($8.3 billion) in value. It lost 61.42% or R28.40, to R17.61 on the JSE.

The company also advised that its audited results will be delayed pending further investigation.

Several analysts took to social media to express their concern over the company’s debt. However, in a statement Steinhoff said that it was giving “further consideration to the … validity and recoverability” of €6 billion worth of the company’s non-South African assets.

“The company wishes to provide additional comfort on the company’s liquidity. In this regard, the company has today received expressions of interest in certain non-core assets that will release a minimum of €1 billion of liquidity,” Steinhoff said.

“In addition, the company’s subsidiary Steinhoff Africa Retail Limited (STAR) will today formally commit to the refinancing of its long-term liabilities due to the company.”

It said it expected STAR’s refinancing to be concluded on better terms than those applicable to its current liabilities due to Steinhoff, given the strong cash flow inherent in its business.

“The additional liquidity of circa €2 billion expected to be achieved through these measures will strengthen the company’s balance sheet and should provide additional comfort to stakeholders of the company’s ability to be able to fund its existing operations and reduce debt,” Steinhoff said.

The company said that based on the current information at the board’ disposal there is no evidence to suggest that CFO, Ben La Grange, had any involvement in the matters under investigation. It said that La Grange would therefore remain in his position.

“Ben La Grange has resigned from his position as CEO of STAR in order to focus solely on his role as CFO of the Company at this time,” Steinhoff said.

Christo Wiese, who owns 23% of Steinhoff, will run the company on a temporary basis.