JOHANNESBURG - Steinhoff's share price took a hammering yesterday on the JSE after the group announced that it was facing impairments of more than 6billion (R89.53bn) and at least five lawsuits.
The share price declined by more than 8percent to R1.60 a share before recovering some losses to close at R1.74 a share.
However, the group said yesterday that it was handling its liquidity challenges, including external group financing and debt cluster treatment, engagement with creditors, litigation, restructuring plan objectives and an update on the release of the financial statements.
The troubled retailer has a total outstanding external debt of 10.4bn, with 8.7bn attributable to Europe, 1.4bn attributable to South Africa and 0.25bn to the US operations.
The group will also meet its lenders next week in London.
“Discussions with the numerous lenders to the group are progressing and it is intended that the group's restructuring plan will be presented at a private lenders meeting scheduled to be held in London on May 18.
"The plan is to present the group's updated restructuring proposal to the lenders. This updated restructuring plan will cater separately for the requirements of the various groups of lenders,” the group said.
However, the group’s auditors, PwC, have told Steinhoff that the overstatement of profits and the handling of off-balance-sheet entities would result in “material additional” asset write downs.
Ron Klipin, a senior analyst at Cratos Capital, said Steinhoff was facing problems because it paid a premium for most of its acquisitions, such as Mattress Firm in the US.
Steinhoff acquired Mattress Firm for $2.4billion (R30.2bn) in 2016.
“The impairments also might come as a result of their Europe operations, where they have just lost a case against Seifert Entities with the court declaring that they own 50percent of Poco instead of 100percent as it was reported earlier in their financial statements. On top of that, the group also reported major property impairments in central Europe,” Klipin said.
He added that he would have expected Steinhoff to sell bigger stakes in the South African operations in KAP Industrial Holdings, Steinhoff Africa Retail (STAR) and PSG Group. “They could have raised more liquidity by selling off more stakes in these companies.”
Steinhoff is also being sued by its former chairperson and biggest shareholder, Christo Wiese for R59bn.
Steinhoff's share price has declined by more than 96percent since it first reported financial irregularities on December 5, wiping off almost 12.5bn in market capitalisation.
The group said it aimed to release its full year audited 2017 results by the end of December 2018 and the audited 2018 results before the end of January 2019.