Steinhoff Raises $313 Million From Africa Unit Share Sale

(Bloomberg) -- Steinhoff International Holdings NV raised 3.75 billion rand ($313 million) from the sale of shares in the embattled retailer’s African operations to further shore up its balance sheet following an accounting scandal late last year.

The move follows similar disposals of stock in South Africa’s KAP Industrial Holdings Ltd. and investment holdings company PSG Group Ltd. The total generated from the sale of stakes in the three South African companies is about $1.6 billion. The fund-raising initiatives are enabling Steinhoff to buy time from creditors as the company struggles to recover from a 94 percent stock-price crash.

The owner of Conforama in France and Poundland in the U.K. sold 200 million shares in Steinhoff Africa Retail Ltd., known as STAR, reducing its stake to about 71 percent, it said in a statement Thursday. The settlement price was 18.75 rand a share, a 2.6 percent discount to STAR’s closing price in Johannesburg the previous day. Steinhoff spun off the unit last year, and the operation has been largely protected from the crisis that’s engulfed its erstwhile parent.

Attractive Asset

“STAR is one of Steinhoff’s more attractive assets, but it is also among the most liquid,” Charles Allen, a London-based analyst at Bloomberg Intelligence, said by phone. That makes it easier to sell than, for example, Conforama or clothing chain Pep’s Eastern Europe operations, he said.

Steinhoff said Dec. 5 it had uncovered accounting irregularities and that Chief Executive Officer Markus Jooste quit. PwC is investigating the accounts, with a particular focus on off-balance-sheet transactions related to the central Europe operations, and the company is being probed by a host of regulators and law authorities around the world.

Steinhoff’s shares rose 13 percent by 10:32 a.m. in Frankfurt, where the company moved its primary listing in 2015. The stock had lost 27 percent over the previous four days. STAR slid 1.6 percent in Johannesburg.

“Steinhoff surely doesn’t want to be seen as a distressed seller of STAR as it would weigh on the share price,” Allen said. “That it sold only 6 percent suggests it’s not a desperate seller.”

To contact the reporters on this story: John Bowker in Johannesburg at jbowker2@bloomberg.net, Janice Kew in Johannesburg at jkew4@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Renee Bonorchis, John Bowker

©2018 Bloomberg L.P.