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Steinhoff delays results and CEO quits, shares crash

Billionaire Christo Wiese, Steinhoff’s largest shareholder and chairman, will take charge of the company in an executive capacity on an interim basis.

Markus Jooste. Picture: Supplied.

JOHANNESBURG - Shares in Steinhoff International lost more than half their value on Wednesday after the furniture retailer said it would launch an investigation into accounting irregularities, its chief executive resigned and it postponed full-year results.

Billionaire Christo Wiese, Steinhoff’s largest shareholder and chairman, will take charge of the company in an executive capacity on an interim basis.

Steinhoff said late on Tuesday that Chief Executive Markus Jooste had resigned with immediate effect after the discovery of new information prompted the company’s supervisory board to ask consultants PwC to perform an “independent investigation”.

“The Supervisory Board of Steinhoff wishes to advise shareholders that new information has come to light today which relates to accounting irregularities requiring further investigation,” it said in a statement.

The furniture retailer postponed its results announcement and a webcast scheduled for Wednesday until further notice.

Outgoing CEO Jooste had been at the helm of Steinhoff for nearly 20 years and oversaw its expansion from a furniture manufacturer in South Africa to one of the largest household goods retailers in the world.

Steinhoff has been aggressively expanding in developed markets since moving its primary share listing from Johannesburg to Frankfurt in 2015, snapping up Britain’s Poundland, US-based Mattress Firm and Australia’s Fantastic.

SHARES SLUMP

Steinhoff, which has its primary listing in Frankfurt, said Wiese would “embark on a detailed review of all aspects of the company’s business with a view to maximising shareholder value”.

Steinhoff’s South African shares slumped 60% to a seven-year low of R17.56 as the Johannesburg securities exchange opened, recovering to R19.971, still down 56%, by 0855 GMT. Shares in Frankfurt were down 58%.

Steinhoff has been under investigation for suspected accounting irregularities by the state prosecutor in Oldenburg, Germany since 2015. Steinhoff has said that was a tax case relating to whether revenues were booked correctly, and taxable profit correctly declared.

Reuters reported last month that Steinhoff did not tell investors about almost $1 billion in transactions with a related company despite laws that some experts believe require it to do so.

It is unclear what accounting irregularities the company was referring to in its statement. A spokesman declined further comment and attempts to contact Jooste were not successful.

The chief executive of Steinhoff African Retail (STAR), part of Steinhoff which includes the control of Shoprite, also resigned on Wednesday.

“In light of these developments at Steinhoff, STAR’s existing CEO, Ben la Grange has decided to step down as CEO of STAR,” the company said in a statement.

STAR shares were down 21.5% at R19.30 by 0855 GMT.

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