Steinhoff cites lender support as retailer strives for recovery

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Johannesburg - Steinhoff International will meet immediate interest payments and said it has won the support of South African lenders as the global retailer makes early progress in its battle to survive an accounting scandal.

The owner of Mattress Firm in the US and Conforama in France is seeking about €200m (R3bn) to help maintain liquidity at its European businesses, Steinhoff said in a statement on Thursday. A first installment of €60m will be delivered by the end of the week.

A planned refinancing of all South African debt will allow Steinhoff to free up funds for the rest of the company, the retailer said.

“This is a relatively small step, but it does imply there is some money to go around - not a lot, but some,” Charles Allen, a London-based analyst at Bloomberg Intelligence, said by phone. “That they are asking for a relatively small amount of money may imply they can keep the company going. What terms lenders want is important.”

Going Concern

The financing update underlines the Frankfurt and Johannesburg-listed company’s determination to survive as a going concern even after it reported accounting irregularities that knocked 90% off the market value.

The stock rose as much as 8.2% after the statement, although it then pared gains to trade 0.4% higher as of 16:18.

Other retail chains owned by Steinhoff include Pep, Africa’s largest clothing chain, and Poundland in the UK.

The scandal led to the resignations of chief executive officer Markus Jooste and chairperson Christo Wiese, who is also the biggest shareholder.

Both have since taken steps to shore up their personal finances, with Jooste selling a champion race horse and putting a R15m luxury property on the market. Steinhoff is being probed by South African regulators and has been called to a hearing with lawmakers to discuss its near collapse at the end of the month.

READ: Viceroy short seller who flagged Steinhoff irregularities steps forward

Steinhoff said it would give a trading update for the three months through December in the last week of February, its first report on the performance of the business since it failed to publish audited earnings last month.

The company has appointed PwC to investigate the accounting issues and will update on progress “as soon as it is able to do so”, Steinhoff said. The auditor’s probe has unlimited scope and PwC will have full access to the company.

The retailer’s next meeting with European-based creditors is scheduled for January 26, in London. Conforama is exploring options for its own financing after agreeing to sell a stake in French online retailer Showroomprivé for about €79m.

Steinhoff’s €800m of bonds due 2025 gained 5 cents on the euro to 63 cents, the highest level since December 5, according to data compiled by Bloomberg.

“As far as one can tell, all the issues are in the European business and so the meeting on January 26 with European lenders is notable,” Allen said. “The trading update will also be important.”

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