Creditors abandon Steinhoff as accounting scandal worsens

Steinhoff crisis

Steinhoff is enduring fresh crisis after it had its credit insurance cancelled or reduced and credit facilities suspended while its shares continued to fall.

In a presentation for lenders at a meeting in London yesterday, the South African parent company of UK retailers Poundland, Bensons for Beds and Harveys said it has started to lose credit lines from lenders, adding more pressure on the firm as it deals with an accounting scandal.

Although bosses at the Poundland fascia sought to reassure its staff that it was still performing strongly despite the controversy surrounding its parent company, it has emerged that it now faces possible difficulties after an insurance company reportedly reduced its cover on credit for suppliers selling goods to the discount retailer.

Steinhoff was first plunged into crisis after admitted earlier this month that it has appointed PwC to investigate what is estimated to be a £5.3 billion hole in its accounts linked to the company’s assets outside of South Africa.

It prompted Markus Jooste to immediately resign from the position as chief executive and its full year report was postponed.

As a result, Steinhoff’s share prices fell 88 per cent, wiping off around £9 billion of its value.

Days later, it was revealed that the annual report needed to be restated due to inaccuracies and Steinhoff’s credit rating was reduced.

Christo Wiese then quit his role as chairman last Thursday in an effort to reinforce independent governance and restore confidence and trust in Steinhoff.

While shares recovered by marginal 10 per cent yesterday when the company promoted chief operating officer Daniel Maree van de Merwe as its new chief executive, and hired Heather Sonn as acting chair, it fell sharply again after Steinhoff’s update with lenders in London.

Steinhoff also said yesterday that it could not provide further detail on the extent of the problem or when it could produce audited accounts for 2017 and restated accounts for last year.

It also admitted that accounts from previous might also need to be restated.

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