Steinhoff board to talk assets

HAVE TO GENERATE A CASH FLOW, SERVICE DEBT Chair tells parliamentary commission investigation by PwC is on track.

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

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 an 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 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 to the matter said.

Sonn was speaking before a committee of parliament probing the scandal.

She told the 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,” said Greg Davies of Cratos Capital.

Steinhoff shares jumped 7.7% to R2.37, valuing it at about R10 billion, a dramatic fall for the company that was valued at more than R200 billion before the scandal.

Former chief executive Markus Jooste is due to appear before the committee next Wednesday, cochair 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.

There is probably belief 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