Steinhoff moves to reassure investors on liquidity
The retailer at the centre of an as yet undisclosed accounting scandal also said Ben la Grange resigned as CEO of the Star spin-off to focus on his role as Steinhoff finance chief
Steinhoff International issued a statement on Thursday morning saying it "wishes to provide additional comfort on the company’s liquidity".
The furniture group said its supervisory board believed it could recover €6bn in "certain non-South African assets", which would be more than its €4.76bn market capitalisation on the Frankfurt stock exchange following Wednesday’s 62% share price crash to €1.14.
Furthermore, Steinhoff said it would gain €2bn from its recently unbundled subsidiary Steinhoff Africa Retail (Star), which "will today formally commit to the refinancing of its long-term liabilities due to the company".
The statement included a clarification that the resignation of Star CEO Ben la Grange on Wednesday was not because he was suspected of the accounting irregularities at the parent group, where he has the role of chief financial officer.
La Grange had resigned from Star to focus solely on his role as chief financial officer at Steinhoff.
The statement said a further €1bn was in the pipeline as it had "today received expressions of interest in certain noncore assets".
But news of yet another transaction may not reassure investors since Steinhoff’s constant wheeling and dealing appear to be behind its accounting scandal, which led to CEO Markus Jooste’s sudden departure on Tuesday night.
With few other facts to go on, investors have turned to an investigation published by Reuters in November.
Reuters discovered Steinhoff had bought a 45% stake in Swiss company GT Branding and then lent it about Sf810m ($810m).
The other 55% was owned by Campion Capital, which according to Viceroy Research is controlled by an associate of Jooste, George Alan Evans, and former Steinhoff executive Siegmar Schmidt.
Viceroy Research added to the Reuters investigation by including details of Steinhoff’s acquisition of Southern View Finance, a Bermuda-based company that was briefly listed on the JSE.
Southern View Finance is owned by Steinhoff chairman Christo Wiese and trades as Capfin, a microlender based in Pep stores accused by the National Credit Regulator of predatory lending.
"There is zero transparency into these businesses which are in essence controlled by Steinhoff," Viceroy Research said in its report.
"Through a series of Steinhoff-financed transactions, revenues and financial benefits were siphoned away from the Steinhoff entity and toward Southern View Finance’s ultimate owners, companies heavily invested by Wiese," Viceroy Research said in its report.
"Through a ‘corporate dialysis’ process, Steinhoff then re-acquired the consumer finance entity’s profitable segments without any of its unrecoverable loan book or running losses."