Steinhoff's 'only way to survive': slim down, sell assets
* Steinhoff gives first investor presentation since fraud
* Company sets out plan to become investment holding firm
* CEO says weighing all options on Pepkor Europe
* Investors say action on litigation key
By Wendell Roelf
CAPE TOWN, Aug 13 (Reuters) - Scandal-hit Steinhoff's
only hope for survival is to sell off assets to become
a retail-focused holding company, it said on Tuesday, as it
fights to recover from a $7 billion accounting fraud and share
Established more than 50 years ago, the firm transformed
itself from a small South African outfit to a furniture and
household goods retailer straddling four continents before it
shocked investors by flagging holes in its accounts in December
Since then, it has had to stomach losses of up to $4 billion
a year and a dramatic fall from grace that has left it fighting
to stay afloat.
CEO du Preez delivered a stark assessment of Steinhoff's
options at the company's first public investor presentation
since the scandal took hold, saying a radical transformation
into a retail-focused investment holding company was its "only
way to survive".
Steinhoff has already sold a number of assets that do not
align with that plan, and is looking to sell off others as well
as cut jobs at its French retail chain Conforama, its management
said during the presentation.
In a subsequent interview, du Preez said this would also
give individual units more operational independence and
decision-making power by reducing services like human resources
and financing at group level.
The company's Johannesburg-listed shares were up 3.88% at
1109 GMT as investors welcomed the news.
"There is a lot of work still to be done, but I think
management is doing the right things and focusing on the right
things, although it still has a mountain to climb," said Sarine
Barnard, an analyst at Investec Asset Management who attended
The company has already sold off a number of assets,
including an Austrian furniture chain and stakes in firms like
KAP Industrial Holdings.
Its remaining portfolio includes furniture and household
goods firms such as Mattress Firm Inc in the United States and
the Fantastic chain in Australia, general merchandise outlets
including Britain's Poundland, and a host of clothing stores.
Asked about reports it was considering an initial public
offering of its Pepkor Europe unit, which owns Poundland as well
as retail chains Dealz and Pepco, du Preez said Steinhoff was
considering all options and that no decision had been made.
Attendees said another big problem for Steinhoff is
litigation. The company's stock tanked after the scandal, and
numerous investors are claiming compensation for losses.
CEO du Preez said the company was in talks to settle the
lawsuits out of court, and hoped to deal with them in a single
"How to solve the litigation is key," said Barry Cadle, a
stockbroker with a personal shareholding in Steinhoff. If the
company can get past the litigation, he said, it may lead to a
Executives at the presentation said the ongoing impact of
the fraud would leave Steinhoff fighting for profitability for
years to come, even with strong turnover.
As part of its overhaul it may look to restructure
struggling French retail unit Conforama - which has had to raise
hundreds of millions of dollars to fund its business amid
mounting debt and falling sales - and cut jobs, executives said.
Steinhoff's total debt, at 9 billion euros ($10.09 billion),
is also too high and needs to be addressed, du Preez said.
Measures will be taken to deal with this, including the
re-issuance of previous debt instruments, he said.
($1 = 0.8918 euros)
(Reporting by Wendell Roelf; Writing by Emma Rumney; Editing by
Jason Neely and Jan Harvey)
First Published: 2019-08-13 10:21:41
Updated 2019-08-13 16:41:26
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