Steinhoff seeks nod to list retailer
Steinhoff International, which is still battling to recover from the accounting scandal that cost investors billions of rand just more than three years ago, has asked for permission from its creditors to list its European discount retailer, Pepco Group.
Steinhoff International, which is still battling to recover from the accounting scandal that cost investors billions of rand just over three years ago, on Monday asked for permission from its creditors to list its European discount retailer, Pepco Group.
The SA consumer goods retailer — which has a primary listing on the Frankfurt Stock Exchange and a secondary listing on the JSE, is on a drive to extract as much value as possible from its portfolio of businesses spread across Africa, Europe, US and Asia.
“I think the hope with the IPOs [initial public offerings] is that the market attached decent valuations to these assets, such that the size of its debt looks a little less ominous against the value of its underlying assets,” said Chantal Marx, head of equity research at FNB Wealth and Investments. “This could place it in a better position with creditors,” Marx said.
Steinhoff has previously said it was also weighing the option of listing the Fantastic Group, Australia’s furniture and bedding retailer.
But the decision has been deferred as the result of the uncertainty surrounding the Covid-19 pandemic.
Steinhoff, which was rocked by one of the biggest corporate scandals in recent years, has
sold several of its assets to reduce debt, which stood at €10bn as of the 2020 financial year.
The litany of lawsuits and its high debt burden stand out as the more pressing matters for the company, which was once regarded as one of SA’s success stories before the accounting scandal came to light in December 2017.
The lawsuits stem from the precipitous decline in the value of the company’s shares, which wiped off more than R200bn in shareholder money when news of accounting irregularities became known in December 2017, prompting the resignation of then CEO Markus Jooste.
As a settlement to all legal claims, which amount to more than R130bn, Steinhoff has put on the table €943m (R16bn). Steinhoff has argued that R130bn is unaffordable and could tip the company into liquidation, in which case all parties will lose out.
“I think the litigation overhang is one thing, but a major problem for the group remains its very high debt levels,” Marx said.
The share price ended 0.47% higher at R2.12 on the JSE, giving Steinhoff a market valuation of R9bn.
In 2015, just before the company moved its primary listing to Germany, its market valuation stood at about R294bn.