Steinhoff sells shares worth R5.79bn in Pepco to reduce its huge debt pile owing to massive fraud

Steinhoff International’s share price surged up 8.16% yesterday morning after it announced that it had raised €315.2 million (R5.79 billion) through the sale of shares. File Photo

Steinhoff International’s share price surged up 8.16% yesterday morning after it announced that it had raised €315.2 million (R5.79 billion) through the sale of shares. File Photo

Published Jan 19, 2023

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Steinhoff International’s share price surged up 8.16% yesterday morning after it announced that it had raised €315.2 million (R5.79 billion) through the sale of 38 million shares in its Poland-listed pan-European discount variety retailing subsidiary Pepco.

There was strong demand for the shares, and the initial offer of 34.5m shares was later upsized to 38m during the placement. Steinhoff, which has Luxembourg as its primary listing and a secondary listing on the JSE, intends to use the proceeds to reduce its debt and Pepco will not receive any of the proceeds from the placement.

Steinhoff said in a JSE notice that it had sold through IBEX Retail Investments (Europe), an indirect wholly owned subsidiary, 38 million ordinary shares of Pepco Group at a price of PLN (Polish Zloty) 38.95 per share, raising about PLN 1.48 billion. Pepco’s share price traded at PLN 41.52 per share in Poland early yesterday afternoon.

Following the sale, Steinhoff Group will indirectly hold 415 594 616 ordinary shares, representing about 72.3% of Pepco Group’s issued share capital.

Steinhoff, which is struggling with debt of some €10bn, had raised about €1bn through Pepco’s listing on the Warsaw stock exchange in 2021. Plans to list its Mattress Firm investment in the US were scuttled this month due to the volatile markets.

It said in December that it would likely not meet its debt commitments this year and it had instead reached a deal with its largest creditors, which could see them holding 80% of the company and leaving shareholders with only a 20 stake. If shareholders approve the plan, Steinhoff may also eventually be delisted.

The Stellenbosch-based Steinhoff has struggled to survive after former executives perpetrated what has become known as South Africa’s biggest accounting fraud that saw the group lose more than 90% of its capital in 2017.

Former CEO Markus Jooste and other former executives face legal action from a variety of authorities, with for instance, Jooste this month fined R15 million by the JSE for offences including the publication of incorrect results, on top of a R20 million fine it received from the FSCA last year for insider trading.

Early yesterday afternoon, Steinhoff’s share price was trading 4.1% higher at 51 cents each. In January last year the share was traded as high as R5.46 but the price has fallen steadily since then.

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