Polish factories go as Steinhoff sheds assets

● Embattled Steinhoff International is still selling assets to stay afloat in the wake of the accounting scandal that has wiped more than nine-tenths off its value.

The company this month sold factories in Poland that had been founder Bruno Steinhoff’s first push into owning his own plants in Eastern Europe after the Cold War, it announced this week.

Steinpol, which consists of eight factories in Poland and one in Hungary, was sold for à26.5m (R416m).

The unit had been instrumental in former CEO Markus Jooste’s strategy to source and produce goods in lower-cost emerging economies and sell into developed markets.

Jooste resigned in December 2017 as the group flagged “accounting irregularities” and postponed the release of its financial statements, sending Steinhoff shares crashing.

Though the Steinpol deal was reported in the European furniture trade media last year, Steinhoff International only announced it this week, describing the unit as a “non-core manufacturer”.

Until only 14 months ago the group was on an acquisitive spree — still eyeing grocer Shoprite at the time after bagging Britain’s Poundland and Australia’s Fantastic Furniture. It has since turned seller.

After the earlier acquisitions and following revelations of formerly undisclosed debts and a European property portfolio worth less than previously thought, Steinhoff’s debt stood at à9.8bn by the end of June last year.

Though the sale of Steinpol is a drop in the debt bucket, it does show that the company is willing to veer off its earlier vertical integration plans by selling off manufacturing interests.

“If they can take a chunk out of that debt by selling assets, they should,” said Vestact portfolio manager Michael Treherne.

Steinhoff International last year disposed of retailers Kika-Leiner, POCO and Hungary’s Extreme Digital. It has also trimmed stakes in Pepkor (called Steinhoff Africa Retail or Star at the time) and KAP Industrial, and let go of half the equity in US-based Mattress Firm, which it bought less than three years ago for $3.8bn (R52.5bn).

“Steinhoff is going to be a shell of its former self,” Treherne said.

Selling assets is one part of Steinhoff’s restructuring. Another is postponing the repayment of the debt for as long as possible.

The company also said its financial statements are expected to be released no later than April 18, but the date would depend on the delay caused by the latest challenge to its arrangement with creditors. These are the long-overdue financial statements for the year ended September 2017, and also for the year ended September 2018.

LSW, which claims it is owed more than à290m, seeks to challenge some of the provisions of Steinhoff’s voluntary arrangement with those it owes money to.

Steinhoff said LSW is linked to former business partner Andreas Seifert, who Jooste blames for Steinhoff’s change in fortunes.

The arrangement with the other creditors remains in place, the company said.

Selling assets is one part of restructuring. Another is postponing debt payment