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Steinhoff raises R4.8bn from KAP Industrial stake sale

Stock jumps on news.
Steinhoff said on Tuesday the placement would be offered to institutional investors only and will result in the company no longer holding an interest in KAP. Picture: Bloomberg

Troubled South African retailer Steinhoff said on Wednesday it had raised R4.8 billion from the sale of its 26% stake in KAP Industrial to pay off debt and shore up its finances, sending its shares higher.

Steinhoff admitted “accounting irregularities” in December 2017, shocking investors who had backed its reinvention from a small South African business to a multinational retailer at the vanguard of the European discount furniture retail industry.

Read: Steinhoff deals come back to haunt it in PwC investigation

This wiped about 85% off its market value and threw the company into a liquidity crisis.

Steinhoff said in a statement it sold 694 million KAP shares at 6.85 rand per share, a 9.4% discount to Tuesday’s closing price. The book of demand was oversubscribed, it added.

Steinhoff said on Tuesday the placement would be offered to institutional investors only and will result in the company no longer holding an interest in KAP.

Steinhoff shares jumped in early trade on the Johannesburg Stock Exchange, and were up more than 6% by 0725 GMT.

Shares in KAP, a diversified industrial group selling everything from chemicals and auto components to mattresses, were down more than 7%.

In South Africa’s biggest corporate scandal, an investigation carried out by PwC found that Steinhoff recorded fictitious or irregular transactions totalling 6.5 billion euros ($7.3 billion) over a period covering the 2009 and 2017 financial years.

Steinhoff sold down its stake in KAP in March 2018 after placing 450 million shares, or a 17% stake, also via an accelerated bookbuild in a bid to plug a liquidity gap.

Steinhoff has also raised cash from the sale of stakes in South African investment firm PSG Group, French online retailer Showroomprive.com, as well a property in Austria. 

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COMMENTS   3

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Repeating what previously was stated …..

Steinhoff selling good SA assets to cover bad debt in Europe where Jooste and his cronies stole billions.

Shareholders/creditors/stockholders (persons/entities who have lodged claims) need to STOP Steinhoff from selling any assets by order of a court a.s.a.p. or there will be zero valuable assets very soon.

Wake Up ……

Thats one way looking at it. Another way is logic will prevail, settlements will be reached for court cases, debt restructured etc. Shareholders have no say and are last in the que. Creditors (some very astute businesses) have overwhelmingly voted to support LUA. Mattress firm has been restructured, pepkor europe continues to grow etc. I continue to accumulate. Higher risk than normal, but a longer term hold for me. Remember all the doomsayers that predicted Steinhoffs end by January 2018.

Exactly.

KAP is non-core
Contributes Meaningless amount in terms of dividend income
Not a growth company given SA economy outlook
Price from book build is acceptable

One key thing people are missing. The SARB has allowed Steinhoff to repatriate the funds offshore based on the announcement, since SA operations don’t need funding. This was a huge strumming block, but the PIC could still see some recoupment of their holding so makes sense for govt to allow, granted Steinhoff shows it will be used to benefit the company.

End of comments.

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