A December 19 meeting for lenders failed to halt a bond selloff and a
slump in Steinhoff’s Frankfurt- and Johannesburg-listed shares, after
management and advisers didn’t address some of the most pressing
financial questions about the company, which owns Conforama in France,
Mattress Firm in the US and Poundland in the UK.
With auditors PricewaterhouseCoopers still digging into Steinhoff’s
accounts, here are some of the mysteries creditors and shareholders want
answered.
How big is the problem?
The company hasn’t detailed the accounting irregularities, and it
hasn’t provided a timeline for future disclosures. The magnitude of the
irregularities is still under scrutiny, Richard Bussell of law firm
Linklaters, who is advising the company, said in an audio recording
posted on the retailer’s website.
The company intends to restate its
fiscal 2016 accounts, and could revise earlier statements, according to a
presentation.
What’s the state of credit facilities?
Steinhoff didn’t provide details of available financing at the
creditors’ meeting. It has said it’s seeing some lenders suspending or
withdrawing support, as well as insurers cutting exposure.
Still, the
company won approval to roll over €690m ($819m) of
financing due last week,
Matthew Prest, a managing director at Moelis & Co who has been
working with Steinhoff for the past two weeks, said in the audio
recording.
The delay in the publication of 2017 numbers could force
Steinhoff to ask lenders to waive a test on loan terms to maintain
access to credit.
Where is the cash?
With credit facilities at risk, Steinhoff may need to rely on its
cash buffer. Creditors and shareholders are in the dark over the size of
the cash pile because the company hasn’t provided an
update. Company accounts showed holdings of €3.1bn at the end
of March. Steinhoff also hasn’t said whether it will need new money to
keep businesses running. Many units are dependent on the holding company
for funding, according to Steinhoff’s presentation.
What about those €6bn in assets?
Soon after announcing a delay in the publication of its audited
results, Steinhoff told investors it was investigating “the validity and
recoverability of certain non-South African assets of the company which
amount to circa 6 billion euros.”
Tuesday’s presentation provided no
further clarity on the nature or status of those assets, or which
subsidiaries they were related to.
Why did the CEO leave?
Steinhoff didn’t give a reason for
Markus Jooste’s resignation, which was announced alongside the
accounting irregularities. He was a protege of the company’s largest
shareholder,
Christo Wiese. On Thursday, Barclays Africa Group’s Absa unit said a
racehorse company linked to Jooste owed three South African financial
services firms more than R1.2bn ($94m). Absa has moved
to liquidate the company.
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