JSE puts Steinhoff bonds on notice
Steinhoff’s JSE-listed debt securities — 11 bonds with an outstanding value of R6.8bn – could be suspended if the company fails to publish audited financial statements soon.
The JSE would issue a cautionary if Steinhoff Services, the entity through which the bonds were listed, failed to deliver financial statements by the end of January, JSE GM of issuer regulation Andre Visser said on Friday.
The bourse would grant one month’s grace to publish the financials, as it had done with Eskom, failing which it could suspend the bonds, he said. "We are very strict when it comes to financial statements."
Eskom’s bonds could be suspended if it does not produce financial results by the end of January. Debt issuers must produce interim results within three months of the end of an interim period and annual results within four months of a year end. This period is extended to seven months for state-owned enterprises.
The suspension of its bonds would come as a huge blow to Steinhoff, which is going cap in hand to lenders to meet its cash flow needs after accounting irregularities and the unavailability of audited financial statements led to liquidity issues.
While South African lenders were meeting interim liquidity requirements of €60m, the retail group said that it was seeking approvals for another €140m to plug near-term cash flow needs.
The 11 bonds form part of its R15bn domestic medium-term note programme. There are three notes amounting to R1.3bn that are due to mature in 2018, although Steinhoff said it was considering the early redemption of all outstanding notes in the programme.
There are doubts over whether Steinhoff will meet the month-end deadline to publish its results. External auditors Deloitte said on Friday that it was awaiting the findings of a forensic investigation by PwC into Steinhoff’s accounts before finalising the company’s 2017 financial statements. PwC declined to say when it expected to complete its investigation, citing client confidentiality.
The Steinhoff group and its auditors must also provide restated financials for the 2016 and 2015 financial years. If it failed to produce its 2017, 2016 and 2015 results by the end of January, it could face a sanction of up to €1m from the Frankfurt Stock Exchange, where it has its primary listing, said a spokesman for Deutsche Börse.
"If the issuer does not fulfil its obligations in the long term or proper stock-market trading is not guaranteed in the long run, it could be a reason for a delisting."
Steinhoff’s withdrawal of previous years’ financial results would have been grounds for suspension of the stock if its primary listing were on the JSE, Visser said. However, it had a secondary listing on the JSE and the rules of the primary market took precedence.
It would prejudice South African investors if the JSE suspended Steinhoff’s stock while it was left to trade freely on the Frankfurt exchange, he said.