Steinhoff calls in heavyweights to help defuse accounts crisis

Johannesburg - Steinhoff International's response to an accounting scandal that’s wiped €11bn ($13bn) from the value of the global retailer is to assign three board members to keep a closer eye on corporate governance.

A new sub-committee will be led by Johan van Zyl, co-chief executive officer of financial services firm African Rainbow Capital and a Steinhoff non-executive director since May 2016, the company said after the market closed on Friday.

He will be joined by Steve Booysen, an ex-head of lender ABSA and the chair of Steinhoff’s audit and risk committee. The trio is completed by Heather Sonn, a former investment banker and a Steinhoff board member for four years.

The owner of Conforama in France, Mattress Firm in the US and Poundland in the UK is also working with auditors Deloitte LLP to publish full-year financial results, which were delayed indefinitely on Wednesday after the company discovered accounting irregularities and said Chief Executive Officer Markus Jooste had quit.

Steinhoff on Friday postponed an annual meeting with bankers in London by eight days to December 19, citing a lack of financial information to discuss. This may indicate that the retailer plans to publish earnings in the interim period.

Probe

An investigation by PricewaterhouseCoopers (PwC) is underway, Steinhoff also confirmed on Friday. The probe will seek to uncover details behind a scandal that’s led to an 84% share-price plunge in three days. Lenders and other creditors have almost €18bn exposed to the company, which has its roots in South Africa and has expanded aggressively around the world.

Long-term liabilities were €12.1bn and short-term liabilities €5.87bn at the end of March, Steinhoff’s first-half earnings statement shows. In South Africa, Steinhoff has relationships with Standard Bank, Investec and a unit of FirstRand. Globally some of the lenders include Citigroup, Bank of America, HSBC Holdings and BNP Paribas SA.

Banks also are exposed to Steinhoff through loans provided to chairperson Christo Wiese’s investment vehicles.

Last year, the billionaire and largest shareholder of the company pledged 628 million Steinhoff shares as collateral to borrow money from Citigroup, HSBC, Goldman Sachs and Nomura Holdings. That was to participate in a share sale in conjunction with the acquisition of Mattress Firm and Poundland, according to a company statement.

Wiese’s wealth has plummeted since the scandal broke. His net worth is now $1.8bn, according to the Bloomberg Billionaire’s Index. That compares with $4.4bn at the start of the week.

Steinhoff shares traded 20%t lower at €0.472 at the close Friday in Frankfurt, where the company moved its listing from Johannesburg two years ago. The yield on its €800m bonds due January 2025, rose 443 basis points to 14.19%.

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