Ann Crotty Writer-at-large
Picture: ISTOCK
Picture: ISTOCK

The Steinhoff share price ticked up briefly on Thursday after the release of a "process and liquidity update" in which the group said it was seeking waivers from some European funders and that it expected to be able to pay cash interest on "all its existing financial indebtedness at the ordinary contractual rate over the near-term forecasted period".

After spiking to R7.30 the share eased back to close at R6.93, a gain of 5.3% on the day.

In a bid to relieve some of the pressure caused by broken covenants Steinhoff will shortly ask some of its European creditors to agree to limited waivers of the usually strict conditions attached to debt covenants.

The group will request responses to its waiver proposals in the coming weeks.

"While the company is confident that it will receive sufficient support from its relevant finance providers to obtain these limited waivers, there can be no assurance that the company will be able to reach agreement with its finance providers on acceptable terms or at all," the update read. Without the waivers, the supervisory board and its advisers may be restricted in their ability to stabilise the operations of the group.

There is no firm indication of when shareholders can expect to see the results of the eagerly awaited independent investigation by PwC.

The audit firm has been working with Steinhoff and its legal advisers in relation to the accounting irregularities flagged in December. The supervisory board has instructed PwC that the scope of the investigation is not limited in any way and has ensured it has full access to Steinhoff. "The group aims to provide an update on progress with the accounting inquiries as soon as it is able to do so."

Steinhoff informed shareholders in December that its accounting irregularities stretched back to 2016. Since that announcement every page of the group’s 2016 integrated annual report has been stamped with the warning "Information can no longer be relied upon".

The supervisory board expects to provide an update on the trading performance of its underlying business in the three months to end-December by the last week of February.

To achieve stability the group is attempting to ensure the trading performance of its individual business units is maintained and the uncertainty around accounting issues is resolved as quickly as possible.

In a related announcement early on Thursday, Steinhoff said Jayendra Naidoo, who represents the group’s empowerment partner, had stepped down from the supervisory board.

Naidoo said he wanted to focus his efforts on the board of Steinhoff Africa Retail (Star), of which he is chairman.

Naidoo’s Lancaster Group holds about 9% of Star. Although initially hit by fallout from the Steinhoff scandal, Star has been holding up reasonably well in recent trading.