Steinhoff mulls PSG, KAP stake sales

Steinhoff is considering selling stakes worth a combined $1.4 billion (about R19.1 billion) in local companies PSG Group and KAP Industrial to help plug a liquidity gap at the retailer, two sources familiar with the matter said.

Steinhoff, the owner of more than 40 retail brands including Conforama, Mattress Firm and Poundland, is seeking to shore up its finances after more than $14 billion was wiped off its market value last week following its disclosure of accounting irregularities and its chief executive’s exit.

Steinhoff plans to raise around €2 billion (about R32.1 billion) from the sale of non-core assets and the proceeds of debt repayments from Steinhoff Africa Retail.

“It cannot get any more noncore than their stake in PSG,” a source said. “It is on the table and so is the stake in KAP.”

The likely sale of the stakes was corroborated by a second source based in Frankfurt, who said they were first on the list of possible divestitures to plug funding holes.

Steinhoff owns about 25% of PSG, a R60 billion investment holding company, and 39% of diversified industrial group KAP Industrial, which is worth around R6.1 billion at current market prices.

Steinhoff, KAP Industrial and PSG Group declined to comment.

The Johannesburg source, who declined to be named because he is not authorised to speak to the media, also said the stakes would most likely be sold in chunks via a so-called accelerated book build to institutional investors.

Steinhoff said on Sunday it had called in turnaround specialist AlixPartners to help shore up its liquidity. It also hired US investment bank Moles & Co to help it prepare for a delayed meeting with lenders in London next week.

Steinhoff’s shares dropped more than 80% before a modest recovery this week.

Steinhoff has been under investigation for suspected accounting irregularities by the state prosecutor in Oldenburg, Germany since 2015 and four current and former managers are under suspicion of having overstated revenues at subsidiaries, prosecutors said. – Reuters

It cannot get any more non-core than their stake in PSG. It is on the table and so is the stake in KAP.

A source familiar with the Steinhoff saga