SHOPRIT: 19,016 -89 (-0.47%)
Steinhoff scandal knocks $12 bln off value in blow to tycoon Wiese
(Corrects Dec. 7 story to clarify Christo Wiese did not start
Pepkor in paragraph 10)
* Scandal wipes out $12 bln of shareholder value
* PIC says Steinhoff affair raises "serious concerns"
* Finance minister says has "grave concern"
* Shares extend fall, hit 8-year low of 10 rand
* Sell-off hits top shareholder Wiese
By Tiisetso Motsoeneng and Victoria Bryan
JOHANNESBURG/BERLIN, Dec 7 (Reuters) - Shocked Steinhoff
shareholders have wiped more than $12 billion off its value
since it revealed "accounting irregularities" and parted ways
with its chief executive, in a dramatic fall from grace for the
South African retailer.
Once a must-have for investors who backed its reinvention as
a retail empire including brands such as Mattress Firm and
Poundland under veteran CEO Markus Jooste, Steinhoff
shares fell by 43 percent on Thursday, compounding the
previous day's more than 60 percent fall.
This collapse leaves South African tycoon Christo Wiese,
Steinhoff biggest shareholder and chairman, seriously out of
pocket, eroding more about $2.8 billion of his net worth.
It also prompted an urgent call by South Africa's Finance
Minister Malusi Gigaba for pension fund managers to report back
on their exposures to the sudden sell-off, saying that the
accounting issue was a "grave concern".
South African Deputy President Cyril Ramaphosa said the
Steinhoff scandal was "catastrophic".
"It is catastrophic is that it destroys trust, it destroys
confidence in the corporate sector," Ramaphosa said on Talk
South Africa's Public Investment Corporation (PIC), the
retailer's second-largest shareholder, said the allegations
against Steinhoff were "serious concerns".
The PIC, which manages civil servants' pension funds, said
in a statement it holds around 10 percent of Steinhoff's stock.
The shares closed down 43 percent at 10 rand in Johannesburg
and were down more than 40 percent in Frankfurt, where it has
had its primary listing since 2015.
Steinhoff has responded by putting 76-year-old Wiese, one of
the most respected business leaders in South Africa, in charge
for now and calling in PwC to investigate the accounting
problems, while also seeking to reassure investors by saying it
has enough liquidity to fund its existing operations.
Wiese, who describes himself as a "realist, pragmatist", was
one of the early executives of budget clothing retailer Pepkor,
which was co-founded by his parents in the 1960s in Upington on
the southern edges of the Kalahari desert.
He studied law in Stellenbosch, a close-knit town dominated
by Afrikaans-speaking whites, but now lives in Clifton, an
affluent area of Cape Town overlooking the Atlantic Ocean and is
best known for transforming budget grocer Shoprite from
just six shops in the 1970s to hundreds of stores across Africa.
Wiese and Jooste were instrumental in reinventing Steinhoff,
turning it from a modest distributor of furniture made in
communist era eastern Europe to a global household goods
retailer, vying for market share with the likes of IKEA.
Steinhoff has been on shopping spree since 2011 when it took
over French furniture retailer Conforama. Last year's string of
acquisitions included Mattress Firm and Poundland, thrusting it
firmly on to investors' radar screens.
"Whether Steinhoff's zealous expansion tactics amount to a
winning or losing strategy really does depend on the outcome of
the investigation," said Erika Sirimanne, Head of Home and
Garden Research, Euromonitor International.
Steinhoff has been under investigation for suspected
accounting irregularities by the state prosecutor in Oldenburg,
Germany since 2015.
Four current and former managers are under suspicion of
having overstated revenues at subsidiaries, German prosecutors
said this week.
Steinhoff has previously said that move related to whether
revenues were booked properly, and whether taxable profit was
($1 = 13.5574 rand)
(Reporting by Tiisetso Motsoeneng and Victoria Bryan;
Additional reporting by TJ Strydom and Olivia Kumwenda-Mtambo in
Johannesburg; Editing by Susan Fenton/Keith Weir/Alexander
First Published: 2017-12-07 10:09:29
Updated 2017-12-22 10:18:08
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