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Steinhoff raises R3.75bn from Africa unit share sale

The sale was at an offer price of R18.75 per share, representing a discount of 2.6% to Star’s closing price on Wednesday.
Picture: Supplied

Steinhoff International Holdings NV raised R3.75 billion from the sale of shares in the embattled retailer’s African operations to further shore up its balance sheet following an accounting scandal late last year.

The move follows similar disposals of stock in KAP Industrial and investment holdings company PSG. The total generated from the sale of stakes in the three South African companies is about R19.21 billion. The fund-raising initiatives are enabling Steinhoff to buy time from creditors as the company struggles to recover from a 94% stock-price crash.

The owner of Conforama in France and Poundland in the UK sold 200 million shares in Steinhoff Africa Retail, known as Star, reducing its stake to about 71%, it said in a statement Thursday. The settlement price was R18.75 a share, a 2.6% discount to Star’s closing price in Johannesburg the previous day. Steinhoff spun off the unit last year, and the operation has been largely protected from the crisis that’s engulfed its erstwhile parent.

Attractive asset

“Star is one of Steinhoff’s more attractive assets, but it is also among the most liquid,” Charles Allen, a London-based analyst at Bloomberg Intelligence, said by phone. That makes it easier to sell than, for example, Conforama or clothing chain Pep’s Eastern Europe operations, he said.

Steinhoff said December 5 it had uncovered accounting irregularities and that CEO Markus Jooste quit. PwC is investigating the accounts, with a particular focus on off-balance-sheet transactions related to the central Europe operations, and the company is being probed by a host of regulators and law authorities around the world.

Steinhoff’s shares rose 13% by 10:32 am in Frankfurt, where the company moved its primary listing in 2015. The stock had lost 27% over the previous four days. STAR slid 1.6% in Johannesburg.

“Steinhoff surely doesn’t want to be seen as a distressed seller of Star as it would weigh on the share price,” Allen said. “That it sold only 6 percent suggests it’s not a desperate seller.”

© 2018 Bloomberg L.P

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Thus is like Chinese torture – one drip at a time!
The hole in the Steinhoff balance sheet is so massive – moves like this is like putting a plaster on a decapitation – not going to make an ounce of difference but hoping it looks like something is being done to stem the flow!

the advisors, bookrunners and brokers are coining it!! lovely to watch…

Why doesn’t Steinhoff just sell its expensive businesses offshore and pull back to SA only.

This was essentially an obligation towards the JSE. 20% has to be free float, as per the listing agreement of Star.

Once again, the company has no short-term liquidity issues in SA, this much is clear.

Another important step for the company towards mending the Balance Sheet. Steinhoff will soon become a takeover target.

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