Steinhoff mulls additional write downs, pays down debt

Steinhoff-Horslepy-Park-renderEmbattled retail conglomerate Steinhoff International has been warned that likely will need to book additional write-downs to the €6 (AUD$9.5b) billion in impairments it incurred last December.

The scandal ridden company is also facing the prospect of at least five law suits, including its own proceedings against former chief executive Markus Jooste.

Auditor Pwc has delivered findings from the first four months of its forensic investigation into Steinhoff’s books, concurring with Deloitte’s initial assessment that there are a variety of irregularities in the company’s accounts that would likely require further impairments to be made.

“It has since emerged that the expected overstatement of profits and the accounting treatment of related parties may also result in material additional impairments of intangible and other assets,” the company said in the Netherlands yesterday.

Legal woes

Steinhoff is also in the process of filing contribution proceedings against former chief Markus Jooste relating to bonuses paid by the business prior to his departure.

Separate claims connected to former chairman Christo Wiese, which top AUD$6.3 billion, will be vigorously defended, Steinhoff said on Wednesday.

There are further demands from entities connected with South-African financial services group GT Ferreira for around €100 million and South African shoe retailer Tekkie Town, which was acquired by Steinhoff in 2016 and is seeking around €120 million.

Tekkie Town is seeking to have the acquisition cancelled on the basis that was Steinhoff was presenting in 2016 was “false”.

Steinhoff is also facing a class action suit in Germany, which it said on Wednesday it was still considering.

Paying down debt

Steinhoff has scrambled to pay down debt in recent months amid the accounting scandal in a bid to bolster the confidence of skittish lenders around the world.

The business said on Wednesday that it will soon complete a €2 billion (AUD$3.1b) repayment program on its African Group’s debt, which sat at €1.4 billion (AUD$2.2b) as at 31 March. Around €200 million (AUD$316m) has been repaid in the last five and a half weeks alone.

In Europe, where there was €8.7 billion (AUD$13.7b) in debt outstanding as at 31 March, negotiations with numerous lenders are ongoing, with a restructuring plan slated to be presented on 18 May in London.

The restructuring plan will seek to move Steinhoff away from using its assets to underpin working capital, interest and advisor fees and towards a model that better manages cash flows.

Steinhoff is expected to provide more detail on the Pwc audit before the end of June when it publishes its unaudited interim results for the six months ended 31 March.

The business said it hopes to release its full year audited 2017 results by the end of December 2018 and audited 2018 results before the end of January 2019.

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