CAPE TOWN – Embattled international retailer Steinhoff has said that it would continue the disposal of some of its assets and cut jobs as it battles to stabilise its finances.
Chief executive Louis du Preez told investors in Cape Town that the group would offload non-retail assets and reduce the headcount at its French retail chain Conforama as part of its plan to slim down into an investment holding firm, management said on Tuesday.
Du Preez said the only way for Steinhoff to survive was to become a pure investment holding company mainly focused on retail, which was why most of its asset sales had been in property and shares rather than retail holdings.
He said Steinhoff had concluded financing agreements to provide stability until the end of 2021 in the face of declining profits, high interest payments, debt of about €10 billion (R172bn), litigation risk and further restructuring.
Du Preez said the group would forgo its focus on share price value and concentrate on its core business.
“We are not going to be able to trade ourselves out of this debt,” Du Preez said. “We will have to sell more of our assets.”
Steinhoff is battling to recover from a corporate accounting scandal that wiped R200bn of shareholder equity off its equity in December 2017 – allegedly committed by a cohort of directors under former chief executive Marcus Jooste.
Tuesday was the first time since the share price collapsed that the group provided details of its restructuring, planning and risks to stakeholders in an open briefing.
After severe restatements, impairments and write-downs of its financial results in preceding years, Steinhoff reported earnings before interest, tax and amortisation of €393 million in the half-year to June, from €230m at the same time a year before.
Some of its businesses were performing well at operational level, while others were not. Du Preez said the company voluntary arrangement would be concluded soon.
He said Steinhoff NV would be the guarantor of €9.bn of debt which would not entail interest payable in cash. Du Preez said the debt, which would fall due at the end of 2021, excluded some €1.8bn of debt at the operating level of Steinhoff subsidiaries.
He said Steinhoff would in future be run as an investment holding company with a focus on the retail sector.
He said the group still faced substantial litigation risks, from creditors and other vendors, from seven shareholder grouping who had all bought shares on the market, and from legal action being brought to bear on former directors.
He said he believed the litigation risks from creditors and vendors had largely been “uncovered”.
A “holistic” approach was being sought to deal with the class actions from seven shareholder “action groups” that had arisen both in the Netherlands and in South Africa. This litigation would involve not only shareholder losses, but possibly also shareholder damages claims, which was a rare legal proceeding in South Africa, and could possibly result in litigation over several years.
He said he did not know when the various authorities would bring criminal charges against Jooste.
Du Preez said in addition to pursuing civil legal action against Jooste and former chief financial officer Ben la Grange for their remuneration and bonuses, the group was taking civil legal action against Top Global in Austria. This company was associated with some of the individuals implicated in the PWC report, and Steinhoff believed it was owed some €300m by it.
He said the group would be in a position to either refinance itself again or reach some agreement with its shareholders about raising additional finance by 2021.