Poundland owner’s shares tumble amid management changes and lender warning
The company admitted it was seeing “credit facilities increasingly being suspended or withdrawn”.
Shares in Steinhoff, the South African owner of Poundland, tanked as the firm installed an acting executive and warned that lenders are pulling cover amid a deepening crisis sparked by accounting irregularities.
In a presentation prepared for a crunch meeting with lenders, the company admitted it was seeing “credit facilities increasingly being suspended or withdrawn”.
It also said that “given the ongoing forensic review” it was “not possible” to give further details regarding the “magnitude of the accounting irregularities that are under scrutiny”.
“The recent announcements have had a destabilising effect on the group that will need to be addressed in order to preserve value for all stakeholders,” the company said in its presentation.
It also urged creditors to continue backing the firm.
“Continuing support from the group’s creditors and other stakeholders will be required to maintain stability and to provide the required time to address the current issues and preserve value for all stakeholders”.
Steinhoff’s German-listed shares tanked after the presentation was released, falling more than 20.5%.
The company said it has now appointed chief operating officer Danie van der Merwe as chief executive following the resignation of Markus Jooste earlier this month, when new information came to light which related to “accounting irregularities requiring further investigation”.
Steinhoff has asked accountancy giant PwC to conduct the independent investigation.
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 last week 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.
He has been replaced by Heather Sonn, who is now acting chair of Steinhoff.
There were additional management changes announced on Tuesday, including the appointment of Alexandre Nodale as deputy chief executive and Louis Du Preez – an “experienced qualified attorney” – as commercial director.
Just last week, Investec warned that its exposure to the Poundland owner could dent profits.
While its overall exposure represents a “small portion of the group’s balance sheet”, it said that “Investec Bank Limited (South Africa) does have certain derivative exposures linked to the Steinhoff share price, where a trading loss could materialise”.
As well as Poundland, which it acquired last year for £610 million, Steinhoff is the parent firm of Harveys and Bensons For Beds.