South Africa: Steinhoff Confirms It Will Restate 2016 Results

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 Steinhoff International, the South African retail giant rocked by an accounting scandal, will restate its 2016 financial results after a probe uncovered fresh concerns.

The company, which owns the Mattress Firm chain in the US, discovered the problems with its previous year’s balance-sheet accounting while reviewing statements from 2017, according to a filing on Wednesday.

“The 2016 consolidated financial statements will need to be restated and can no longer be relied upon,” the company said. “Shareholders and other investors in Steinhoff are advised to exercise caution when dealing in the securities of the group.”

The announcement follows a deepening scandal over the company’s finances. Markus Jooste resigned as CEO last week and the bedding giant appointed auditor PwC to probe accounting irregularities.

Moody’s Investors Service cut Steinhoff’s rating to junk last week in the wake of the announcement.

Steinhoff, whose retail empire includes France’s Conforama furniture chain and Poundland in the UK, is staring down the barrel of more than €9bn of long-term debt. That includes a €2.5bn term loan due in March 2018.

Steinhoff has been seeking breathing room from its lenders amid a market rout. The company’s billionaire chairman, Christo Wiese, has been trying to negotiate a standstill agreement on a margin loan of €1.5bn. And the company has gained the support of some key lenders for extra time to repay more than €1bn owed on a revolving credit facility, Bloomberg reported this week.

The accounting revelations led to a plunge in the company’s shares, erasing about three-quarters of their value.

Steinhoff said last week that it was considering boosting liquidity by selling assets worth at least €1bn.

That may include unloading its holding in South African financial services company PSG Group, according to Jannie Mouton, chairman of PSG and a former Steinhoff director. Steinhoff holds almost a quarter of PSG’s stock.

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