INTERNATIONAL - Credit insurers have decided to withdraw insurance cover for South African retailer Steinhoff International’s loans, Steinhoff’s Austrian subsidiary Kika/Leiner said on Monday.
“The loss of the credit insurance is a result of the Steinhoff crisis,” Kika/Leiner said in a statement.
Steinhoff, whose retail chains include Britain’s Poundland, Mattress Firm in the U.S. and Conforama in France, has been fighting to recover from the fallout from accounting irregularities discovered in December.
Steinhoff’s Austrian furniture retailer Kika/Leiner had faced one of the biggest problems within the group, but said in January it secured enough cash to see it through this year.
But international credit insurers decided on Friday to withdraw insurance cover for Steinhoff’s loans against the risk of default from Monday onwards, according to several Austrian media outlets.
“Steinhoff International’s global situation has still not improved,” Kika/Leiner’s Chief Executive Gunnar George told radio station ORF when asked about the reasons for the cancellation of the insurance.
“A large amount of debt still has to be rescheduled,” George said. “This complex situation makes credit insurers very nervous.”
George said the credit insurers’ decision caught him by surprise and that major Kika/Leiner’s suppliers have given him until the end of the week to find a solution.
About 90 percent of Kika/Leiner’s loans had been covered by one insurer, he said, adding he was in negotiations with suppliers and has started talks to find new credit insurers.
This has prompted renewed speculation about a potential sale of Kika/Leiner.
“There is a future for Kika/Leiner in Austria, whether with Steinhoff or without,” George told ORF.
He also said there were currently no negotiations on a sale because he did not have a mandate from Steinhoff’s senior management to do this.
“As a 100 percent subsidiary you can hardly sell yourself,” he said.
Steinhoff said on May 10 it hoped to have a restructuring plan in place soon to put to creditors that would include measures such as fixing the maturity for all loans at three years from the restructuring date.