Steinhoff Hits New Low After Warning of Deeper Accounts Hole

(Bloomberg) -- Steinhoff International Holdings NV’s shares plunged to a record low after the retailer warned of impairments beyond the 6 billion euros ($7.2 billion) reported in December and said it’s facing at least five lawsuits.

Auditors at PwC have told the owner of Conforama in France and Mattress Firm in the U.S. that the overstatement of profits and the handling of off-balance-sheet entities will result in “material additional” asset writedowns, Steinhoff said in a statement Thursday. The full extent will be presented alongside first-half financials next month. The company is also investigating the roles played by those previously at the helm, with former former Chief Executive Officer Markus Jooste likely to be top of the list.

The shares dropped 8.2 percent in Frankfurt to an all-time low of 0.115 euros before paring losses to trade 4.5 percent down at 0.1196 euros as of 5:09 p.m. in the city. The stock has crashed more than 96 percent since Steinhoff first reported financial irregularities on Dec. 5, wiping almost 12.5 billion euros off its market value.

Steinhoff faces a make-or-break meeting with lenders next week about how it plans to restructure at least 10.4 billion euros of debt. The company has relied on asset sales to shore up its balance sheet so far, but warned at its annual general meeting last month that the policy is unsustainable. Steinhoff Africa Retail Ltd., spun off by its parent in December, is busy repaying debt and should complete the process shortly.

‘No More’

“If they can’t agree on the restructuring plan, then it probably means no more Steinhoff,” Charles Allen, a retail analyst at Bloomberg Intelligence, said by phone. “If they can show they have businesses with decent cash flows and balance sheets, then they may well be able to get banks backing.”

While Steinhoff battles to keep more than 12,000 stores in 30 countries in operation, the retailer is facing two class-action lawsuits in Germany and the Netherlands, where it has a primary listing and a corporate office respectively. On top of that, it’s being sued by former chairman and biggest shareholder Christo Wiese for 59 billion rand ($4.8 billion) and businessman GT Ferreira for 100 million euros. Parties related to Tekkie Town, a South African shoe retailer bought by Steinhoff in 2016, are seeking 120 million euros.

Regarding Wiese, Steinhoff highlighted that his claim was different from the other parties due to his “intimate involvement in and with the group over many years.” The retailer “will use all means and resources available to it to vigorously defend the Wiese entities’ action,” it said.

Steinhoff’s latest update is the first time it’s acknowledged that more than one executive may have been responsible for the accounting malpractice. It’s seeking legal advice on what action it can take against those involved, and will consider trying to reclaim bonuses.

©2018 Bloomberg L.P.

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