Steinhoff share price: From R46 to R6 in under three days

Cape Town - Steinhoff International's share price dropped to under R6 after CEO Markus Jooste's departure amid an accounting scandal.

The shares closed trading on the JSE at R46.25 on Tuesday before the company announced that it had approached PwC to launch an independent investigation into accounting irregularities, and that SA billionaire Christo Wiese would step in as executive chairperson in the interim following Jooste's resignation with immediate effect.

In the latest blow to the embattled global retailer Moody's Investors Service announced late on Thursday that it had downgraded Steinhoff by four notches to B1, and placed the global retailer's rating on review for further downgrade.

Steinhoff shares were traded down 41.7% at R5.83 by 09:43 on Friday on the JSE. The rout which started on Wednesday has wiped off over R160bn of its market capitalisation. The global retail giant is only worth R25bn at current share prices. At market close on Tuesday it was worth R199.3bn.

Moody's said in a statement that it had downgraded the issuer ratings of Steinhoff International Holdings and Steinhoff Investment Holdings, and the senior unsecured notes rating of Steinhoff Europe to B1 from Baa3.

At the same time, Steinhoff Investment's national scale long-term issuer rating was downgraded to Baa3.za from Aa1.za. The ratings were simultaneously put under review for further downgrade.

Moody's said the downgrade and review for further downgrade reflect the uncertainties and implications for the company's liquidity and debt capital structure following an announcement by Steinhoff's Supervisory Board on new information relating to accounting irregularities.

STEINHOFF FALLOUT:

• Steinhoff's Markus Jooste admits he made 'some big mistakes'
  
• Steinhoff sheds more blood as analysts warn of further fallout
  
• Magda Wierzycka asks hard questions about Steinhoff and asset managers
  
• Steinhoff starts selling assets to raise R16bn
  
• Christo Wiese jumps in as Steinhoff CEO quits over accounting failures

Given that allegations of accounting irregularities were raised and rebutted in August 2017 and again in November 2017 it calls into question the quality of oversight and governance at Steinhoff, Moody's said.

The rating agency said its review will focus on the findings of Steinhoff's investigation into accounting irregularities and the consequences for the company's credit profile. "Should further details of the accounting irregularities put additional pressure on Steinhoff's financial condition, this could lead to further downward pressure on the ratings."

Steinhoff shares were trading at R6.25 on the JSE at around 10:30.