Dealz owner under pressure

The parent group of the retail discounter Dealz and Poundland stores is facing huge pressure in Germany following an accounting scandal in South Africa.

The Steinhoff group owns about 60 stores under the Dealz name in the Republic, and had plans to open many more. In the North, it operates as Poundland.

Its shares in Frankfurt slumped to a new low, valuing it at around €1.25bn, following an inconclusive meeting with bankers, and investors sued the global retailer in Germany.

The case against Steinhoff was filed in Frankfurt as investors seek to recover funds after the South African firm reported accounting irregularities.

The class-action-style lawsuit is likely to be the first of many similar cases filed by investors angry over their losses.

Innsworth Litigation Funding, a London-based unit of Paul Singer’s Elliott Management Corp, has begun building a case against Steinhoff and is seeking shareholder clients willing to sue, it said last week.

Recovery Services, a Brussels-based shareholder advisory group, has also invited institutional shareholders to register for a potential case.

Investor action would come on top of lawsuits filed in three countries by a former business partner, Andreas Seifert.

The litigation is a fresh blow for Steinhoff, which attempted to appease lenders at a meeting in London on Tuesday.

The company told the bankers creditors were withdrawing support and that the magnitude of the accounting errors was still unknown, while adding the retailer had been filing accounts without “detailed visibility” of the cash flows of individual operating companies. Steinhoff has not disclosed any outcome of the talks.

- Additional reporting Bloomberg