Poundland owner downgraded amid debt warning
Steinhoff, which also owns Harvey’s and Bensons for Beds, is in the throes of a full-blown crisis.
The South African owner of Poundland has again been downgraded by ratings agency Moody’s, which has warned that it may not have sufficient funds to “sustain its European operations”.
Steinhoff, which also owns Harvey’s and Bensons for Beds, is in the throes of a full-blown crisis sparked by revelations of accounting irregularities earlier this month.
It triggered a share price collapse, a management overhaul, lenders deserting the firm and credit insurance being withdrawn from its operating companies.
Cutting Steinhoff’s credit rating from B1 to Caa1, its second such downgrade, Moody’s said the move reflected the “increasing pressure on the company’s liquidity profile”.
The agency added: “The situation has been compounded by its operating companies placing an additional liquidity burden on Steinhoff’s centralised treasury function to fund their working capital needs.
“Moody’s notes that the operating companies have experienced a reduction or cancellation of credit insurance lines in recent weeks, with credit facilities increasingly being suspended or withdrawn.
“Consequently, Steinhoff’s liquidity levels could prove insufficient to sustain its European operations in the near term if it is unable to shore up its cash balances or other sources of liquidity.”
Moody’s pointed out that Steinhoff has 1.47 billion euros of debt maturing next year, and the investigation into accounting irregularities could “make it challenging to either repay or refinance”.
Last week, Steinhoff installed an acting chief executive, Danie van der Merwe, following the resignation of Markus Jooste.
Steinhoff’s chairman, the South African retail billionaire Christo Wiese, had been acting as executive chairman on an interim basis following Mr Jooste’s departure, but resigned in order to “address any possible conflict of interest that may exist”.
Mr Wiese’s Brait investment group owns stakes in Virgin Active, New Look and food chain Iceland.