Steinhoff shares leap 32% on Pepkor £180m loan boost for UK unit

STEINHOFF International’s share price leapt by 32.02 percent on the JSE yesterday after it was reported that the embattled group managed to raise a £180 million (R3.02 billion) loan facility through its subsidiary Pepkor Europe.

The loan facility is said to be provided by US investment firm Davidson Kempner and will help to bring stability for its retail brands, according to Pepkor Europe.

Pepkor Europe owns recent acquisitions like Poundland in the UK and Dealz in Germany.

Pepkor Europe said the loan would help it to support its UK operations and fund future investment as it seeks to limit its reliance on its parent company.

Meanwhile, on Wednesday Poundland, which Steinhoff paid £610m to acquire in 2016, reported that it had a good Christmas with sales up by 5.6 percent in the 12 weeks to December 24, with like-forlike sales in the three weeks to Christmas increasing by 6 percent.

Steinhoff ’s shares rallied on the good news from its subsidiary, rising to R9.07 a share, its highest peak in two weeks, up from Wednesday’s closing price of R6.87 a share.

However, Pepkor Europe said it was prepared to distance itself from the parent company, with its chief executive Andy Bond stating that the new loan “provided stability for its retail brands” and that it was “business-as-usual in its stores and for its 29 000 employees across Europe”.

Steinhoff, the owner of more than 40 retail brands, including Conforama in France, Mattress Firm in the US and Poundland, is seeking to raise $2.4bn (R29.74bn) to shore up its balance sheet.

This was after it found itself in a €6bn (R89.44bn) accounting scandal which has wiped out more than $10bn in market value in the past two weeks following its disclosure of accounting irregularities, which forced former chief executive Markus Jooste to step down from his role.

Earlier this month Steinhoff International warned that accounting irregularities stretched back to 2015.

The troubled retailer saw Moody’s rating agency downgrading its credit rating in December to Caa1 Corporate Family Rating, and on review for further downgrade.

“Moody’s notes the operating companies have experienced a reduction or cancellation of credit insurance lines in recent weeks, with credit facilities increasingly being suspended or withdrawn,” the rating agency said.

Meanwhile, the Public Servants Association of South Africa (PSA) said it was planning a protest march on January 27 on the day of the Sun Met race in Cape Town.

Following the Steinhoff scandal, Jooste stepped down with immediate effect from the National Horseracing Authority (NHA) towards the end of December.

The NHA confirmed Jooste’s resignation through its chief executive Lyndon Barends, but it seems the PSA wants Jooste completely out of the horse racing fraternity.

The NHA accepted Jooste’s resignation as a member and cancelled his colours and privileges in December.

R9.07 Yesterday’s price of Steinhoff shares on the JSE at noon