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Scandal-hit Steinhoff's lenders start cutting credit, shares tumble again

Uncertainty about Steinhoff’s finances has hammered the shares that are listed in Frankfurt and Johannesburg, driving the firm’s market value down by more than $10 billion.

Former Steinhoff CEO Markus Jooste. Picture: Gallo Images/Financial Mail/Jeremy Glyn

JOHANNESBURG - Steinhoff said on Tuesday it had started to lose credit lines from lenders, pummelling the South African retailers’ shares again as it grapples with an accounting scandal.

The embattled owner of brands such as Mattress Firm, Conforama and Poundland said in a presentation prepared for lenders at a meeting on Tuesday in London that it was still unable to determine the scale of the financial irregularities.

Uncertainty about Steinhoff’s finances has hammered the shares that are listed in Frankfurt and Johannesburg, driving the firm’s market value down by more than $10 billion since it first disclosed what it described as “accounting irregularities” two weeks ago. The stock tumbled 20 percent further on Tuesday.

The firm, once dubbed Africa’s IKEA and which vied with the Swedish giant for global market share, said some credit facilities were being suspended or withdrawn, while insurers were cancelling or reducing credit insurance.

“Given the ongoing forensic review, it is not possible to provide further detail regarding ... whether any additional years financial statements may require restatement,” Steinhoff said in a presentation to lenders.

The company, which has spotted a €2 billion hole in its balance sheet, urged lenders which include Commerzbank AG to continue to provide support.

Steinhoff was sitting on €10.7 billion in outstanding debt with about €690 million notional facilities rolled over to date, the company said.

But the lack of clarity about the company’s financial situation and its future has rattled investors.

“It points to uncertainty and markets hate it,” said Ryan Woods, a trader at Independent Securities. “More importantly, are banks going to allow them to have their lines of credit?”

In its efforts to steady the company, Steinhoff named Chief Operating Officer Danie van der Merwe, a company veteran of two decades, as acting chief executive, the second person to hold the executive role since CEO Markus Jooste quit on 5 December.

Steinhoff’s top shareholder Christo Wiese initially stepped into the executive post, but abruptly resigned as chairman and de facto CEO last week.

Van der Merwe, with acting chairperson Heather Sonn, now has the task of steering the recovery of a firm that grew from a modest distributor of furniture in communist eastern Europe to a global firm spanning food, furniture and clothing.

Steinhoff had been a “must have” for investors, who were won over by its reinvention and ambition, even though it faced investigation for suspected accounting fraud in Germany since 2015. The company’s primary listing is in Frankfurt.

Four current and former managers are under suspicion of overstating revenues at subsidiaries, prosecutors have said.

The company has previously said the investigation related to whether revenues were booked properly, and whether taxable profits were correctly declared.

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