Steinhoff continues trade, appoints subcommittee

11 December 2017

Johannesburg – Disgraced retail international holding company Steinhoff [JSE: SHF] has established a board subcommittee to bolster independent governance following the resignation of CEO Markus Jooste over accounting irregularities which are being investigated.

In a note to shareholders issued on Monday morning, the group announced that it has taken several actions following Jooste’s resignation last week.

German authorities are investigating “four current and former managers of a group” for possible accounting fraud, but would not name those in question. Steinhoff has approached auditing firm PricewaterhouseCoopers to investigate the irregularities as well.

The share price plummeted as much as 91% last week, and the firm lost as much as R282bn, City Press reported.

The statement indicated that a board subcommittee, consisting of independent non-executive directors, is to be headed by Sanlam’s former CEO Johan van Zyl. Other members include Dr Steve Booysen from the University of Pretoria’s School of Accountancy and Heather Sonn, managing director of Gamiro Investment Holdings.

The group’s audit committee is also working with Deloitte to ensure the release of its audited financial statements, which the group confirmed have been put on hold. The note also confirms that PwC has commenced its investigation.

Despite the challenges, trade will continue. “Trading in the underlying businesses across the globe continues uninterrupted particularly in the pre-Christmas period,” the note read.

Global investment bank Moelis & Company has been appointed as an international advisory team, and consulting firm AlixPartners has been appointed operational adviser.

“Moelis will support and advise on the group’s discussions with its lenders, while AlixPartners will assist on liquidity management and operational measures,” the group said in a separate note to shareholders.

Lenders

The group is focusing on “safeguarding operational liquidity” to continue funding its existing operations. The group appealed to lenders and its existing facilities to continue their support of the group to “achieve an immediate stabilisation” of its financing.

The group also postponed its meeting with lenders meant for December 11 to December 19. The topic of discussion will be to provide an update on its operational and financial situation.

With Steinhoff taking a beating, there are concerns that investor the Government Employee Pension Fund (GEPF) is also at risk.

Finance Minister Malusi Gigaba has asked for a report indicating the extent of exposure to the GEPF.

The Steinhoff share price opened at R6.97 and fell to R6.00 by 09:15 on the JSE on Monday. Fin24

Text of statements:

STEINHOFF - INDEPENDENCE GOVERNANCE STRENGTHENED

Following the resignation of the former CEO, Markus Jooste, and subsequent events, the Supervisory Board of the company has taken a number of actions to date, including the following: 

A board subcommittee, composed solely of independent non-executive directors and headed by Johan van Zyl has been constituted to bolster the independent governance of the group. The other members are Dr Steve Booysen and Ms Heather Sonn;

The audit committee is working with our statutory auditors, Deloitte to facilitate the release of our audited financial statements;

PWC has been appointed as forensic investigators and they have commenced their investigations; and

Trading in the underlying businesses across the globe continues uninterrupted particularly in the pre-Christmas period.

Steinhoff is a global group with 130 000 employees in its underlying operations comprising approximately 12 000 retail outlets in 30 countries with many successful underlying operations.

STEINHOFF - UPDATES ON PROCESS

Reference is made to the announcement released on 8 December 2017, in which the Steinhoff International Holdings N.V. Group (“the Group”) announced the rescheduling of its regular annual lender meeting in London from 11 December to 19 December 2017. In advance of this meeting, the Group wishes to provide the following updates:

Appointment of an International Advisory Team

The Group announced that Moelis & Company ("Moelis") and AlixPartners have been appointed as independent financial advisor and operational advisor respectively with immediate effect. Moelis will support and advise on the Group’s discussions with its lenders, while AlixPartners will assist on liquidity management and operational measures.

Immediate Stabilisation

The Group is currently fully focussed on safeguarding operational liquidity to continue funding existing operations throughout its various subsidiaries. In this context, the Group is asking for and requires continued support in relation to existing facilities from all its lenders to achieve an immediate stabilisation of the Group’s financing.

Lender Meeting

The purpose of the meeting will be for the Group to provide an update on its ongoing operational and financial situation. An agenda for the meeting will be circulated ahead of 19 December 2017.

Caution

Shareholders and other investors in the company are advised to exercise caution when dealing in the securities of the group.

Statements issued by Steinhoff through the JSE SENS Service, 11 December 2017