At long last, we can expect some results from Steinhoff
Full-year 2017 numbers due in December, before which the company desperately tries to service its debt
The former high-flying global furniture and clothing retailer Steinhoff has assured lenders the forensic investigation into accounting irregularities, which prompted a 95% collapse in the share price, will be completed by the end of 2018.
During a presentation on Thursday Steinhoff told lenders, who have agreed to a three-year lockup of the group’s €9.4bn debt, that the group aims to release full year audited results for 2017 by December 31 and results for 2018 by January 31 2019.
Initial findings of the forensic investigation led to the write-off of $12bn, equivalent to over 10% of the group’s assets earlier this year.
On Thursday Steinhoff management informed lenders that plans for a much-needed improvement to the group’s liquidity have been hit by a dispute over the proposed €270.68m sale of Steinhoff’s remaining interest in German-based furniture retailer Poco.
Steinhoff said the dispute with Andreas Seifert, its joint venture partner in Poco, which triggered a damaging investigation by the German tax authorities in 2015, had been settled.
“However, co-shareholders in the holding company have declared a dispute,” said Steinhoff. This means most of the €270.68m proceeds from the sale of the remaining Poco interests will be frozen until the dispute is settled.
During a recent parliamentary hearing, former Steinhoff CEO Markus Jooste told MPs that one of his biggest mistakes was to place so much trust in Siefert. “He turned out to be a bad partner,” said Jooste, who had established a partnership with the German businessman in 2007.
Jooste also said he could not say whether the Steinhoff share would recover or what its value would be in the future. “The company has disposed of a lot of assets and what is left is not the same [as the company I managed]; it’s impossible to know what it will look like in future.”
The share price plummeted to R1.07 in June from R56 in November 2017. On Thursday it closed 8% weaker on the day at R2.54.
The three-year lock up agreement with lenders is offering a hefty 10% return for the holders of Steinhoff’s €9.4bn debt, which will be rolled up twice a year. This means Steinhoff will be adding almost €1bn a year to its debt burden, leaving it with a potential €13bn when the agreement expires. The sale of assets will be crucial to relieving some of this debt pressure.
Steinhoff management said the sale of the Kika-Leiner property company, which was valued at €490m, was due to be completed by end-October. The sale of its stake in property company Atterbury Europe generated €223.5m.