Ann Crotty Writer-at-large
Markus Jooste
Markus Jooste

The former high-flying global furniture and clothing retailer Steinhoff has assured lenders the forensic investigation into accounting irregularities that prompted a 95% collapse in its share price is on track for finalisation by the end of 2018.

During an update presentation on Thursday Steinhoff told lenders, who have agreed to a three-year lock-up of the group’s €9.4bn debt, that the group aims to release full-year audited results for 2017 by December 31 2018 and results for 2018 by January 31 2019.

Initial findings of the forensic investigation led to the write-off of $12bn, equivalent to more than 10%, of the group’s assets, earlier in 2018.

On Thursday Steinhoff management informed lenders that plans for a much-needed improvement in the group’s liquidity have been hit by a dispute over the proposed €270.68m sale of Steinhoff’s remaining interest in German-based furniture retailer Poco.

German investigation settled

Steinhoff said the dispute with Andreas Seifert, its joint venture partner in Poco, which triggered a damaging investigation by the German tax authorities in 2015, had been settled.

"However, co-shareholders in the holding company have declared a dispute," said Steinhoff. This means the majority of the €270.68m proceeds from the sale of the remaining Poco interests will be frozen until the dispute is settled.

During a recent parliamentary hearing former Steinhoff CEO Markus Jooste told MPs one of his biggest mistakes was to place too much trust in Siefert. "He turned out to be a bad partner," said Jooste, who established a strategic partnership with the businessman in 2007.

Jooste also told the MPs he could not say whether the Steinhoff share would recover or what its value would be in the future. "The company has disposed of a lot of assets and what is left is not the same."

The share price fell to a low of R1.07 in June from R56 in November 2017. On Thursday it closed 7.97% down to R2.54.

The three-year lock-up agreement with lenders is offering a hefty 10% return for the holders of Steinhoff’s €9.4bn debt, which will be rolled up twice a year.

This means Steinhoff will be adding almost €1bn a year to its debt burden, leaving it with a potential €13bn debt when the agreement expires. The sale of assets will be crucial to relieving some of this debt pressure.

Steinhoff said the sale of the Kika-Leiner property company, valued at €490m, was due to be completed by end-October.

The sale of its stake in property company Atterbury Europe generated €223.5m.