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FILE PHOTO: A sign is seen in a Poundland store in London

Steinhoff faces shareholders as it battles to stay afloat

By Toby Sterling and Wendell Roelf

AMSTERDAM/CAPE TOWN (Reuters) - South African retailer Steinhoff remains in a "tough position" and is talking to creditors about restructuring debt, the company said on Friday, as directors faced shareholders for the first time since an accounting scandal.

Steinhoff, which runs chains such as Britain's Poundland, Mattress Firm in the U.S. and Conforama in France, is fighting for its survival after discovering holes in its books in December, wiping out 90 percent of its stock market value and forcing asset sales to raise cash.

"The group has been engaging with its creditors across the debt clusters to create a window of stability and to develop a restructuring plan," the company said in a website presentation as it began a shareholder meeting in Amsterdam.

Steinhoff's total borrowings stand at 10.4 billion euros ($12.7 billion), racked up in an acquisition spree over the last decade.

Newly appointed finance head Philip Dieperink said the company had sufficient cash to meet its immediate needs but had technically breached some debt agreements and remains in a "tough position".

Steinhoff is trying to renegotiate its debt and will likely sell more assets as part of any restructuring plan, Dieperink said.

Shares in Steinhoff were up 4.3 percent at 2.67 rand in Johannesburg, valuing it at roughly 11 billion rand. Just four months ago, it was worth more than 200 billion rand ($16.5 billion).

SIFTING THROUGH MILLIONS OF DOCUMENTS

Steinhoff has hired auditors PwC to investigate its problems and the accounting firm has gathered millions of records and conducted many interviews with employees and outsiders.

Steinhoff said initial findings from the probe have revealed that a pattern of transactions over "a number of years" led to a "material overstatement of income and asset values."

PwC's investigation is expected to be completed by the end of the year.

The shareholder meeting in Amsterdam was being streamed to an exhibition and trade show centre in Cape Town, where there were dozens of protesters, led by civil servants union Public Service Union (PSA).

"Our main concern is that the current board that is sitting in Steinhoff are the ones that are responsible for the loss of pension money, which directly affects our members and pensioners," said Reuben Maleka, a member of trade union PSA.

Shareholder rights group VEB is suing the company along with banks that prepared its stock market flotation in Frankfurt in 2015.

"Where was the governance? ... Where was the supervisory board?," said Armand Kersten of the VEB.

Steinhoff's chairwoman Heather Sonn said no current or proposed board members were implicated in the accounting irregularities, which date back to at least its 2015 accounts.

But the company has reported its former chief executive Markus Jooste to the South African police over suspected corruption. He was an instrumental figure in its rapid growth into a multinational vying with the likes of IKEA.

Former chairman and biggest shareholder, Christo Wiese, who is not accused of any wrongdoing, resigned shortly after the scandal broke.

($1 = 12.0875 rand)

(Writing by Tiisetso Motsoeneng; Editing by Elaine Hardcastle)

First Published: 2018-04-20 13:33:38
Updated 2018-04-20 17:54:30


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