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Steinhoff’s board to meet this week over asset sales to pay debt

The board will decide which assets it needs to sell to pay off its debt.
Banks have given Steinhoff till 2021 to work out its asset sales. Picture: Dwayne Senior, Bloomberg

Steinhoff’s board will meet over the next two days to discuss asset sales to boost cash flow and pay down debt, its chairwoman said on Wednesday, months after creditors of the South African retailer threw it a lifeline.

Read: Steinhoff says the threat of imminent collapse has been averted 

Steinhoff had been fighting for survival since December last year when it uncovered accounting irregularities that sent its shares crashing and left it scrambling for working capital.

In July, its creditors agreed to hold debt claims for three years, removing a imminent threat of default that would have tipped the company into bankruptcy.

“They (banks) have given us three years until 2021 to, in a considered way, decide which assets we sell and how we will bring down the debt,” Heather Sonn said.

“A key consideration there is that the assets that remain have to be able to generate a cash flow and service the remaining debt.”

Steinhoff, which has more than 40 brands that include Conforama, Mattress Firm and Poundland, has already sold assets that include its Polish unit Kika/Leiner, as well as a stakes in investment holding firm PSG and industrial firm KAP.

Pepco, a clothing and footwear chain in central and eastern Europe, is seen as one of the names next in the block, a source close the matter said.

Sonn was speaking before a committee of South African parliament that is probing the scandal, which is also under investigation by accounting firm PwC.

PwC investigation on track

She told the parliamentary panel an investigation by PwC was on track to be largely completed by year-end, sending its shares more than 13% higher.

“There is probably belief in the market that the PwC report will provide some more clarity and the market is just happy that we might finally get some answers,” Greg Davies, Cratos Capital.

Steinhoff shares jumped 7.7% to R2.37, valuing it at around R10 billion ($696 million), a dramatic fall for the company that was valued at more than R200 billion before the scandal broke.

Former chief executive Markus Jooste is due is due to appear next week before the committee next Wednesday, co-chair of the committee, Themba Godi, told Reuters.

Jooste would be speaking publicly for the first time since he abruptly resigned following the discovery of multibillion rand holes in Steinhoff’s accounts.

He was an instrumental figure in the transformation of Steinhoff from a small Johannesburg furniture outfit into multinational retailer with more than 40 brands in the United States, Europe, Africa and Australia.

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Let’s consider what the board of Steinhoff International NV are dealing with:
a) The value of the company has over the past nine months been impaired by One Hundred and Ninety Thousand Million Rand (from R200 billion to R10 billion);
b) The very high, over-extended debt of Steinhoff are effectively increasing due to the extension arrangement at higher financing costs and the huge legal and auditing costs associated with the 3 year extension deal;
c) The board are deciding which assets to sell – not to improve cash-flow from operations, as stated by Ms Sonn the CEO of Steinhoff – but rather to realise capital from assets – so as to start working down the very high, over-extended debt levels out of capital realization and not from efficient cash-flow profits.
d) No major operations or staff restructuring or major cost cutting exercise has been effected so as to improve normal cash-flow from operations, whilst billions has been spend on consultancy-, auditing- and legal fees as well as on over-stocked and over-paid staff-, managerial- and director remuneration.
e) If only 50% of current debt are to be repaid from asset realization whilst operations are not efficiently and urgently restructured so as to improve profitable cash-flow from operations, there will be very little left of Steinhoff in the near future.
The writing on the wall has deteriorated.

LOL. Delusional.

For someone who sold out at a “healthy profit” you stil seem to care about this company. Why?

3xLeverETF – Facts are still facts.
I also said at the time, that I will continue to speculate in the volatility of this share and have bought in again at R2,00 a share on 16 August 2018. We are very close to where I can sell again at a 33% profit margin within less than a one month period. Not to shabby according to my liking.

France: if you really believe all the doom and gloom comments that you keep posting you would never touch this share, but the fact that you keep coming back to it indicates otherwise.

End of comments.

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