August 31, 2018 / 10:19 AM / 2 months ago

Crisis-hit Steinhoff says nine-month sales rise 2 percent

JOHANNESBURG (Reuters) - Steinhoff (SNHJ.J) (SNHG.DE) reported a slight increase in nine-month sales on Friday as its managers remained preoccupied with cleaning up after an accounting fraud that nearly tipped the South African retailer into bankruptcy.

Steinhoff was thrown a lifeline last month when its creditors agreed to delay debt claims for three years after the multinational retailer uncovered accounting irregularities that sent its shares crashing and left it scrambling for working capital.

The company, which is registered in the Netherlands, said sales rose 2 percent to 12.9 billion euros (11.57 billion pounds) in the nine months through June as a strong showing at its separately listed African unit, Pepkor (PPHJ.J), offset weak results from Europe, the United States and Europe. The group’s brands include Mattress Firm in the United States and Poundland in Britain.

“As a management team we are focussed on maintaining stability within the operations; finalising the implementation of the restructuring plan with the group’s financial creditors; improving governance at all levels,” the company said in a statement.

Shares in Steinhoff rose 1.7 percent to 2.89 rand as of 1130 GMT, valuing the company at around 12 billion rand, far from the more than 200 billion rand valuation the stock fetched just nine months ago.

Steinhoff has already written down the value of its assets by more than $12 billion following the initial findings of an investigation into the company’s past bookkeeping practices.

The probe, being carried out by auditing firm PwC, has uncovered accounting irregularities that date back to at least 2015, and is expected to be completed by the end of the year.

DEBT DEAL

Sealing a debt deal has allowed the company to boost cash flow, mainly through the sale of assets, and address multiple lawsuits filed against it. Those include a 59 billion rand (3.08 billion pounds) claim by former chairman and top shareholder Christo Wiese and a class action from Dutch shareholder rights group VEB.

“The Supervisory and Management Board, assisted by a newly constituted litigation committee, and in consultation with its attorneys, continues to assess the merits of and responses to all of these claims and have filed a number of initial defences,” Steinhoff said.

The debt deal, which removed the imminent threat of default on the company’s near 10 billion euros of debt, also gives creditors a say on who should be on the board and what assets Steinhoff should sell.

Steinhoff said it sold European property unit, Atterbury Europe, for 223.5 million in June and its Puris and Impuls bathroom and kitchen unit brands in Germany for an undisclosed sum.

Reporting by Tiisetso Motsoeneng; Editing by James Macharia, Susan Fenton and Kirsten Donovan

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