NewsSouthern AfricaSteinhoff faces angry shareholders as it renegotiates debt

Mon,10Dec2018

Posted on Friday, 20 April 2018 13:20

Steinhoff faces angry shareholders as it renegotiates debt

By Reuters

Shoppers make their way along the wide shopping avenues inside the newly-opened Mall of Africa in Midrand, South Africa, Thursday April 28, 2016. Photo: Denis farrell/AP/SIPASouth African retailer Steinhoff is in talks with creditors about restructuring its debt, it said on Friday as it faced shareholders for the first time since an accounting scandal surfaced in December.

Steinhoff, which runs chains such as Poundland and Mattress Fir, is fighting for survival after discovering holes in its books. The accounting scandal wiped billions off its stock market value and triggered a cash crunch.

"The group has been engaging with its creditors across the debt clusters to create a window of stability and to develop a restructuring plan," the company said in a presentation.

Investors, who backed the company's reinvention from a small furniture outfit in Johannesburg to multinational that once vied with IKEA, are facing directors for the first time since more than 90% of their stock value was wiped out.

The meeting is being held in Amsterdam and streamed live to an exhibition and trade show centre in Cape Town, where dozens of protesters, led by civil servants union Public Service Union (PSA), held up placards that read: "arrogance is not the solution" and "hands off our provident funds".

"Our main concern is that the current board that is sitting in Steinhoff are the ones that are responsible for the loss of pension money, which directly affects our members and pensioners. So they must do the honourable thing and just resign," Reuben Maleka, a member of trade union PSA.

Shareholder rights group VEB, which is suing the company, along with banks that prepared its stock market flotation in Frankfurt in 2015, plans to put questions to the board about the scandal.

"We still know next to nothing about what actually happened. It's been five months already," said Armand Kersten of VEB. "Every single decision that shareholders make, they have to make in the absence of information, and the company’s directors are responsible for that."

Accounting problems stretching back years

A South African shareholder Bobby Snodgrass, who owns about 100,000 shares, blamed the board for its lack of scrutiny over Steinhoff's accounts but was hopeful the company would survive.

Steinhoff, which parted ways with its chief executive and chairman in December, said initial findings from auditors PwC found that a pattern of transactions were undertaken over "a number of years" that led to the "material overstatement of income and asset values."

PwC has gathered more than millions of records and conducted a series of internal and external interviews as part of its unrestricted scope of the investigation, Steinhoff said.

The company has said accounting problems stretch back to at least the 2015 financial year.

 



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