A German law firm said Dec. 19 that it had filed a lawsuit against Steinhoff International Holdings NV seeking compensation for an investor who has lost thousands of euros as the price of the company's Frankfurt-listed shares collapsed amid an accounting scandal.
S&P Global Market Intelligence could not immediately confirm the suit had been filed. A spokesman for the South African retailer did not immediately respond to a request for comment.
In late-afternoon trading on Dec. 20, Steinhoff's shares in Frankfurt were down 15 euro cents, or 31%, at 32 cents. Steinhoff's share price has plummeted about 90% since Dec. 6, when the furniture, household goods and general merchandise retailer disclosed that it was hiring an independent auditor to investigate potential accounting irregularities and that its CEO had resigned with immediate effect.
More than €11.50 billion in market capitalization has been wiped out during the rout.
Tilp, based in Tübingen near Stuttgart and a specialist in investors' rights, said in a statement that it had filed suit in Frankfurt on behalf of an investor who had purchased 2,000 shares in Steinhoff in September 2016 and September 2017 and suffered €10,000 in losses. According to Tilp's statement, the suit seeks the reversal of the share purchases or 80% of the cost price, roughly the amount of the share-price decline until Dec. 19.
Incorrect balance sheets were "not a natural event," said Tilp managing director Andreas Tilp.
The move comes a day after Steinhoff reported that its outstanding debt at €10.70 billion far exceeded its market value of €1.30 billion and that its credit facilities were increasingly being suspended or withdrawn.
Bond markets appear to be pricing in a possible credit event. An issue of $945.07 million by Steinhoff Finance Holding GmbH of senior unsecured bonds with a maturity date of Jan. 24, 2025 and a coupon of 1.875% recently traded for just 51.93 cents on the dollar.
Steinhoff, which is based in Stellenbosch and incorporated in the Netherlands, owns Mattress Firm in the U.S., Conforama in continental Europe and Poundland, and Harveys and Bensons for Beds in the U.K.