South African retailer Steinhoff remains in a "tough position" and is talking to creditors about restructuring debt, the company said at its first shareholder meeting since an accounting scandal was uncovered in December.
Steinhoff, which runs chains such as Britain's Poundland, Mattress Firm in the U.S. and Conforama in France, is fighting for its survival after discovering holes in its accounts. The company's shares have lost more than 90 percent of their stock market value and assets have had to be sold to raise cash.
'Window Of Stability'
"The group has been engaging with its creditors across the debt clusters to create a window of stability and to develop a restructuring plan," the company said in a website presentation as it began a shareholder meeting in Amsterdam, where the firm is registered.
Steinhoff's total borrowings stand at 10.4 billion euros ($12.7 billion), racked up in an acquisition spree over the last decade.
Newly appointed finance head Philip Dieperink said the company had sufficient cash to meet its immediate needs but had technically breached some debt agreements and remains in a "tough position".
Steinhoff is trying to renegotiate its debt and will likely sell more assets as part of any restructuring plan, Dieperink said.
Auditing Process
Steinhoff has hired auditors PwC to investigate its problems and the accounting firm has gathered millions of records.
Steinhoff said initial findings from the probe, expected to be completed by the end of the year, have revealed that a pattern of transactions over "a number of years" led to a "material overstatement of income and asset values."
South Africa's Public Investment Corporation, which manages around 1 trillion rand in government employee pensions and was Steinhoff's second-largest shareholder, said it was worried about the time it would take to complete the investigation.
"The information was useful but we are worried about the process, it seems to be taking very long and before the PWC process is concluded we won't get audited financial statements and it seems that will only be by the end of the year," he told reporters in Cape Town after the meeting was streamed to an exhibition and trade show centre there.
Irregularities
Steinhoff's chairwoman Heather Sonn said no current or proposed board members were implicated in the accounting irregularities, which date back to at least its 2015 accounts.
The company has reported its former chief executive Markus Jooste to the South African police over suspected corruption. Jooste was an instrumental figure in the company's rapid growth into a multinational vying with the likes of IKEA.
Former chairman and biggest shareholder, Christo Wiese, who is not accused of any wrongdoing, resigned shortly after the scandal broke.
"Typically when in a burning building you run out. Some stayed. We are happy some stayed in the burning building to help," Sonn told investors at the meeting.
"We want to uncover the truth, show the world what has happened, prosecute any wrongdoing and reinstate trust in the company."
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.
