Asset sales won’t help Steinhoff, earnings will
The share price will spike up and down as investors vacillate between hopes of recovery and fears of steady demise
After a spike in the Steinhoff share price on Tuesday investors seemed to take a breather on Wednesday, perhaps worrying they may have overdone the optimism. This volatility is likely to be the sort of trading pattern we’ll see from Steinhoff until the end of the year, when the PwC report is due to be released.The share price will spike up and down as investors vacillate between hopes of recovery and fears of steady demise. We can also expect to hear ongoing rumours of asset sales, some of which will be true. With €9.4bn non-South African debt, generating an annual interest bill of about €400m, and a collection of businesses that are struggling with tough trading conditions, the board might be tempted to try to realise some quick cash inflows. But it’s difficult to see how asset sales will sort out its problems. In May the board provided some indication of the marketability of the various businesses in Europe and the US. The only assets of value were Steinhoff Africa Retail (Star) a...
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