Steinhoff investors sue in Germany
SLUMP TO NEW LOWS AFTER LATEST ACTION TILP is asking shareholders that bought stock from December 7, 2015 to December 5, 2017 to join the lawsuit.
Steinhoff International edged closer to the brink as its shares plunged to new lows following an inconclusive meeting with bankers and investors sued the global retailer in Germany.
The case was filed in Frankfurt district court, TILP law firm stated yesterday. Investors are seeking to recover funds after the SA company reported accounting irregularities, causing the stock to slump about 90% over two weeks.
The shares slumped as much as 37% in Frankfurt.
The class-action-style lawsuit, filed on Tuesday, is likely to be the first of many similar cases filed by investors angry over their losses.
Innsworth Litigation Funding has begun building a case against Steinhoff and is seeking shareholder clients willing to sue, it said last week.
Deminor Recovery Services has also invited institutional shareholders to register for a potential case.
Investor action would come on top of lawsuits filed in three countries by a former business partner, Andreas Seifert.
The litigation is a fresh blow for Steinhoff, which attempted to appease lenders at a meeting in London on Tuesday.
The company told the bankers that creditors were withdrawing support and that the magnitude of the accounting errors was still unknown, while adding that the retailer had been filing accounts without “detailed visibility” of the cash flows of individual operating companies. Steinhoff hasn’t disclosed any outcome of the talks.
TILP is asking shareholders that bought stock from December 7, 2015 to December 5, 2017 to join the lawsuit, saying investors suffered losses because the company didn’t sufficiently inform capital markets about its issues.
Investor lawsuits against beleaguered companies have become more common in Europe in recent years, partly due to the presence of litigation funders, including Elliott’s Innsworth, which offer to cover the cost of legal cases in return for a share of the proceeds.
Steinhoff has hired PwC to investigate the accounts and has started to sell non-core assets to boost liquidity.
CEO Markus Jooste and billionaire Chairperson Christo Wiese have both quit in the aftermath of the scandal.
At the banker meeting, new interim CEO Danie van der Merwe and four other executives gave presentations on the financial strength of units. – Bloomberg
The litigation is a fresh blow for Steinhoff