Ann Crotty Writer-at-large
Picture: 123RF/SOLARSEVEN
Picture: 123RF/SOLARSEVEN

The Steinhoff share price enjoyed one of its strongest trading days in recent weeks on Monday, when it shot up 10% to R8.50 in early morning trade following news that it was putting 29.5-million of its PSG shares up for sale.

At the close of business on Monday, Steinhoff announced it had raised R7.1bn after placing 29.4-million shares at R240 each. The placing price was marginally below PSG’s market price, but analysts said it represented a good price, given the circumstances.

"They did very well to get that price, given the premium on which PSG trades, it’s on a p:e of 28 times," said one analyst.

Although PSG’s share price eased marginally in early trade after Steinhoff’s announcement, it recovered quickly and closed at R254. Monday’s sale was in addition to 20.6-million PSG shares sold by Steinhoff in early December shortly after it informed the market of accounting irregularities.

They did very well to get that price, given the premium on which PSG trades, it’s on a p:e of 28 times

In early December, the company said it was considering the sale of noncore assets in a bid to raise more than $1bn to plug holes in the balance sheet. It also said it was reviewing the recoverability of non-South African assets worth an additional €6bn. In December, the group reportedly had total long-term debt of about €10bn and short-term debt of €6.2bn. In addition, it had preference share capital of about R1.5bn.

Earlier in January, Steinhoff informed the market it was considering the early redemption of about R7bn of medium-term notes in a move analysts said was designed to release it from restrictions on its ability to sell attractive South African assets. And in another bid to manage its extremely tight liquidity situation last week, Steinhoff announced it was seeking limited waivers from the conditions attached to loans provided by some of its European funders.

Analysts said that without the waivers Steinhoff would be restricted in its ability to stabilise the group’s operations.

Meanwhile, on Monday the Dutch court that was asked to order an investigation into Steinhoff’s accounts said it expected to make an announcement by February 19. A decision was initially expected on December 22. The approach to the Dutch court, which was made by a former joint-venture partner of Steinhoff who is thought to be behind a damning report on the company, was first disclosed in mid-September.

The group’s former CEO, Markus Jooste, said at the time "the annual accounts of Steinhoff International were established according to all applicable rules and to our best knowledge".

An Amsterdam-based analyst said on Monday that, given developments since the initial approach, the court might deem it unnecessary to request such an investigation.

In December, Steinhoff announced it was conducting its own investigation into "accounting irregularities" following its external auditors’ refusal to sign off on the 2017 accounts.

Steinhoff’s supervisory board subsequently announced the group was also reviewing its 2016 and 2015 accounts. Every page of the 2015 and 2016 integrated annual reports has since been stamped "Information can no longer be relied on".

The Dutch analyst said this seemed to make a court investigation redundant.

crottya@bdlive.co.za

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