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Steinhoff says lenders suspending or withdrawing credit facilities

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Steinhoff says lenders suspending or withdrawing credit facilities

Steinhoff International Holdings NV, the South African retailer embroiled in an accounting scandal, on Dec. 19 detailed debts far in excess of its market value and said its credit facilities were increasingly being suspended or withdrawn.

Saying it had €10.70 billion in outstanding debt, compared to its market value of about €2 billion, the furniture, household goods and general merchandise retailer said it had postponed "non-critical expenditure" but that it needed the backing of its lenders to give it the chance to work through its problems.

"Continuing support from the group's creditors and other stakeholders will be required to maintain stability and to provide the required time to address the current issues and preserve value for all stakeholders," Steinhoff said in a statement, as its shares plunged again.

The disclosure came in presentation materials for its annual meeting of lenders in London. The gathering had been postponed from its original date of Dec. 11.

About €11 billion has been wiped off its market capitalization since Dec. 5, the day before the disclosure of accounting issues.

Steinhoff, which is based in Stellenbosch, incorporated in the Netherlands and has its primary stock listing in Frankfurt, said the forecast position of each operating company was evolving daily. Many operating companies were reliant on the group for working capital due to its debt structure and treasury function, it said.

It also reported the reduction or cancellation of credit insurance, which is used to guarantee payments to suppliers.

The company said it was unable to provide any detail on the magnitude of the accounting irregularities under scrutiny, or on the timing of its 2017 audited accounts or the restatement of its 2016 accounts. In addition, it said it was unable to say whether financial statements for any other years would need to be restated.

Steinhoff is engaged in a legal battle at the Enterprise Chamber of the Amsterdam Court of Appeal in which a former joint venture partner has raised questions about its accounts. A verdict is expected by Dec. 22.

Steinhoff's share price has collapsed since Dec. 6 when it reported that an independent auditor was investigating potential accounting irregularities and that CEO Markus Jooste had resigned with immediate effect.

Its stock spiked higher earlier on Dec. 19 after it said it had nominated COO Danie van der Merwe, a former High Court attorney, as acting CEO, but the share price retreated following the release of the update for the lenders' meeting. In midafternoon trading in Frankfurt, Steinhoff shares were down 16% at 49 cents. They have shed more than 80% of their value since Dec. 6.

Steinhoff said in its statement that its outstanding debt at Dec. 14 comprised €8.55 billion in Europe, €1.99 billion in South Africa and €169 million in the U.S. Its lenders were not identified.

The company owns Mattress Firm in the U.S., Conforama in continental Europe and Poundland, and Harveys and Bensons for Beds in the U.K., and it employs about 130,000 workers.