Still count­ing the costs

Financial Mail - - DIAMONDS & DOGS -

Stein­hoff’s re­cent process up­date reads a lit­tle like a com­mu­niqué from the Ti­tanic shortly af­ter it rammed the growler.

The bean coun­ters from PWC have been crawl­ing all over the com­pany’s books for four and a half months, and their find­ings are sub­stan­tially in line with the ir­reg­u­lar­i­ties un­earthed by their com­padres at Deloitte. Ini­tial es­ti­mates into the quan­tum of du­bi­ous as­sets were around the €6bn mark, and the woe­ful news is that this may have been op­ti­mistic.

Stein­hoff’s debt sit­u­a­tion will be gen­er­at­ing many a sleep­less night in the bank­ing fra­ter­nity, with to­tal out­stand­ing ex­ter­nal debt of €10.4bn con­sti­tut­ing a large enough num­ber to con­cen­trate the mind. The com­pany is mak­ing good progress at pay­ing down its African debt but the num­bers are more sig­nif­i­cant in Europe, and a restruc­tur­ing pro­posal will be put to the lenders in what could be a fairly lively meet­ing. The group has been fund­ing it­self through as­set re­al­i­sa­tions, but the restruc­tur­ing will aim to put it on a more sus­tain­able foot­ing.

Clearly the di­rec­tors have a lot on their plates, but they are also hav­ing to re­pel board­ers in the form of a slew of lit­i­ga­tion, in­clud­ing a claim of

Us$4.8bn from en­ti­ties con­nected to Stein­hoff’s for­mer chair, Christo

Wiese, to cover losses caused by his dis­as­trous in­volve­ment with the group.

Stein­hoff prom­ises “to vig­or­ously de­fend the Wiese en­ti­ties’ ac­tion”, point­ing to Wiese’s in­ti­mate in­volve­ment in and with the group over many years. With pro­ceed­ings promised against for­mer CEO Markus Jooste, there’s plenty more to come be­fore this story is over.

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