Dealz-Poundland parent mulls options to cut debt

Crisis-hit South African retailer, Steinhoff — which owns the Dealz-Poundland discount stores in Ireland — is considering “all of its options” to support its liquidity, after a report that it could sell a stake in its African unit.

Steinhoff, which has more than 40 retail brands, including Conforama, Poundland, and Mattress Firm, faced a fight for survival, after admitting “accounting irregularities” in December, wiping about 85% off its market value and throwing it into a liquidity crisis.

It is in talks with lenders about how to stay in business, and has sought to raise funds from non-core operations.

The sale of shares in Steinhoff Africa Retail (Star), in which Steinhoff owns a 77% stake, would come through an accelerated bookbuild, according to sources.

A disposal would follow the South African company’s sell-down of shareholdings in PSG Group and KAP Industrial, which have raised more than €975m since the accounting scandal.

“During the recent trading update, the group stated that it continues to take steps to refinance or redeem the debt-financing within the South African operations,” Steinhoff International said.

“Subsequently the group disposed of a 17% interest in KAP Industrial Holdings and the group is considering all of its options,” it said.

The company plans to raise €2bn from the sale of non-core assets, and from the proceeds of debt repayments from Star, to plug a hole in its balance sheet.

Last week, Steinhoff raised 3.66bn rand (€247.8m) from its KAP stake sale.

Steinhoff spun off its African chains by separately listing Star to get a higher rating for its developed market businesses.

The spin-off was also to give investors, keen on exposure to Africa, a chance to invest in Star directly.

Steinhoff spun off Star into a separate, listed company in September. Star’s shares plunged, alongside its parent, when Steinhoff first reported the accounting irregularities, in early December, though have since clawed back about half the initial 30% fall, as investors acknowledge that the company’s own accounts have been audited and aren’t the focus of an ongoing probe by auditors at PwC.

- Bloomberg, Reuters and Irish Examiner