Steinhoff International Holdings NV on Dec. 7 attempted to placate investors with details about its finances a day after the Frankfurt-listed company disclosed possible accounting irregularities and its stock plunged 62%, but the move was not enough to prevent its share price tumbling further.
The furniture, household goods and general merchandise retailer, whose U.S. business Mattress Firm owns the Sleepy's brand, in a statement said it had received "expressions of interest" in certain noncore assets that would release a minimum of €1 billion of liquidity.
In addition, it said its Steinhoff Africa Retail Ltd subsidiary, which was floated only in September 2017, has committed to refinancing its long-term liabilities due to the company, which would free up another roughly €2 billion.
These measures, Steinhoff said, would strengthen its balance sheet and provide comfort to stakeholders about the company's ability to fund its existing operations and reduce debt.
It said Steinhoff's non-South African assets amount to about €6 billion.
In midday trading in Frankfurt, Steinhoff's shares traded down 36 cents, or 31.3%, to 78 cents, giving it a market capitalization of €3.36 billion. The 74% drop in the company's share price since Tuesday's close at €3.00 has erased almost €10 billion in Steinhoff's market value.
Its shares also are listed in Johannesburg.
Steinhoff is based in Stellenbosch, South Africa, and incorporated in the Netherlands. Its brands include Poundland, Harveys and Bensons for Beds in the U.K. and Conforama in continental Europe. According to its 2016 annual report on its website, Steinhoff operates more than 11,000 stores and employs over 105,000 staff members.
Steinhoff on Dec. 6 delayed the release of unaudited results for the year ended Sept. 30, 2017, and said it had begun an investigation into alleged accounting irregularities. It added that "new information has come to light which relates to accounting irregularities requiring further investigation," and that accounting firm PwC had been approached to perform an independent probe.
German prosecutors are investigating Steinhoff's accounting practices following a dispute with a former joint-venture partner. "The suspicion is that inflated revenue numbers made their way into the accounts," prosecutors in the state of Lower Saxony were quoted as saying in an article on the Financial Times' website Dec. 7. "This may have led to an inflated book value of the group."
The dispute with the former business partner spans jurisdictions. Another case, focused on the company's accounts for the year ended Sept. 30, 2016, is before the Enterprise Chamber of the Amsterdam Court of Appeal.
"The 2016 annual accounts are correct and received an unqualified opinion by our financial auditors," Steinhoff said in a statement Sept. 17. "The allegations brought in against Steinhoff are unfounded and rejected by Steinhoff."
A decision in the Dutch case is expected no later than Dec. 22.
CEO Markus Jooste tendered his resignation with immediate effect, said Steinhoff on Dec. 6. Chairman Christo Wiese stepped up to executive chairman on an interim basis while the company embarks on a detailed review of all its business. He is assisted by Pieter Erasmus, a former CEO of South African investment and holding company Pepkor Group.
Steinhoff said Dec. 7 there was no evidence to suggest that CFO Ben La Grange had any involvement in the matters under investigation and he remained in his post. However, he has resigned as CEO at Steinhoff Africa Retail to focus on his role as CFO.