Steinhoff share price plunge nears 90% as debt cut to junk

Moody’s cuts ratings four notches and warns of further cuts
The FSB has started an independent probe into possible false and misleading financial reports in Steinhoff. Picture: Bloomberg

Steinhoff International Holdings’s shares extended losses to more than 88% since the start of an accounting scandal that’s threatening the survival of the global furniture and clothing retailer.

The stock slumped a further 41% in Frankfurt on Friday after Moody’s Investors Service slashed the credit rating by four notches to junk late on Thursday, highlighting “the uncertainties and implications for the company’s liquidity and debt capital structure.” Almost 10.3 billion euros ($12 billion) has been wiped off the value of the company since Wednesday.

 

Steinhoff share performance

 

Moody’s decision comes as a South African financial regulator starts a probe, adding to a review by Johannesburg’s stock exchange and an investigation in Germany, where Steinhoff moved its primary listing from South Africa two years ago. The owner of Conforama in France, Mattress Firm in the US and the UK’s Poundland said late on Tuesday that chief executive officer Markus Jooste had quit after the discovery of accounting irregularities, although chief financial Officer Ben La Grange remains in place.

‘No way back’

“There’s no way back,” David Shapiro, deputy chairman of Sasfin Wealth in Johannesburg, said in emailed comments on Friday. “The worry is that there are a huge number of operating companies within the stable – if you were a supplier to these businesses would you sell goods on credit? I reckon they should file for Chapter 11 or business rescue and try and salvage what they can.”

Steinhoff has its roots in South Africa and has expanded aggressively around the world with a series of acquisitions, including Mattress Firm and Poundland, and now has 130 000 employees worldwide. It’s hired PwC to examine the financial wrongdoing, postponed the publication of full-year earnings and put non-core assets up for sale.

The retailer’s biggest shareholder is billionaire chairman Christo Wiese, who has stepped in to take temporary charge of the company. He hasn’t yet responded to requests for comment.

The yield on its 800 million euro ($914 million) bonds due January 2025 rose 150 basis points to 11.26%. The shares recovered slightly by 10:10aam in Frankfurt, trading 3.4% lower on the day at 0.575 euros.

Taking steps

Steinhoff said Thursday that it’s considering boosting liquidity by selling assets worth at least 1 billion euros and reviewing the recoverability of non-South African assets worth a further 6 billion euros. The retailer has scheduled a meeting with the lenders of two of its syndicated debt facilities for Monday, according to three people familiar with the matter.

The Pretoria-based Financial Services Board has started an independent probe into possible false and misleading financial reports, while the Public Investment Corporayion, Steinhoff’s second-largest shareholder and a manager of South African government-worker pension funds, said it’s awaiting information from investigations. The PIC owns a 10% stake in Steinhoff, which is now worth $1.1 billion less than two days ago.

South African finance minister Malusi Gigaba said he’s “mindful” that many retirement and savings funds will be hurt by the loss in value and has asked the PIC to prepare a report on the extent of the exposure.

“I think it is the end,” Simon Brown, Johannesburg-based chief executive officer of trading company JustOneLap. “The end will be a break up. There are lots of decent businesses that others will want to buy and it’s likely they’ll fetch decent prices. so staff will mostly be fine, except in head office.”

© 2017 Bloomberg

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And why has the JSE not had Markus Jooste arrested. He admitted “mistakes”. A 2 hour chat to the FD(strange that he is still their but I guess they need his input-for now..) would be adequate to produce prima facie evidence ie that the mistakes were frauds or not, and if fraud to arrest and detain him. Pollsmoor Prison in 38 degrees ( without top of the range air conditioning) is ideal for awaiting trial prisoners!No bail as he is a major flight risk with expensive ponies around the globe!

Pensioners( government and private) are the large losers here (other than Mr Wiese) and the regulators sit on their hands and do nothing! Mr Madoff was arrested very quickly. Why cant the SAPS, FSB or JSE get off their rear ends?

How many mares and how many stallions do you now run at Klavervlei? All in all there are about 1000 horses at Klavervlei. There are 10 resident stallions and a lot of mares. John Koster, who is a partner at Klavervlei, bred Captain Al who was a great racehorse and is now a very successful stallion.

PART OF MR JOOSTES HORSE COLLECTION-SHAMELESS!!

You don’t understand. You are the taxman, so you for one should get it. All those horses are a tax deductible expense. The capital outlay to buy the horses, feeding the horses, veterinary costs, salaries, expenses for the races ect. all tax deductible. What is comes down to is that the taxman has been subsidizing Jooste’s ego trip. His obsession with tax avoidance led to the implosion of Steinhoff.

He would have spent the money on taxes and nobody would have seen him doing so. That does nothing for the ego. Rather spend more on horses, at least people will then see how wealthy you are and the taxman pays 40% anyway. He won’t be the first person on an ego trip to be destroyed by tax schemes.

It’s just not happening for the western cape – no water & now this!!! Time to move back from where you or your ancestors came from! ( that’s Europe for all u white people BTW). Seriously this is very serious- innocent people have lost part of their life savings. As regards going to jail – well how many bankers went to jail after the GFC – ONE. All I’ll say is “I told you” that these so called Rand hedges were NOT. Go back to see what MH & moi were saying – for which we were pilliored

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