Just In

South African Steinhoff faces legal claims of more than $10 billion

JOHANNESBURG (The Southern African Times) – Steinhoff International, battling the fallout from a massive accounting fraud, faces legal claims amounting to more than 9 billion euros ($10.10 billion), the South African retailer’s annual report showed on Wednesday.

The report for the year ended September 2019 listed numerous court cases with claimants seeking more than 9 billion euros in payments or damages. It also included Steinhoff’s annual results, with the retailer’s full-year loss widening to 1.8 billion euros from a 1.2 billion loss a year earlier. 

Steinhoff’s problems began in December 2017 when the company revealed holes in its accounts, shocking investors in the international retail group, which were the initial signs of an accounting fraud since estimated to total $7 billion. 

Established more than 50 years ago, the company expanded beyond South Africa to become a furniture and household goods retailer straddling four continents before the accounting scandal came to light.

After a debt restructuring last year, the company said that managing its litigation risks – the second phase of its plan to return to normality – was now its focus, with these presenting a “significant challenge.” 

The retailer’s Johannesburg listed stock fell 4.9% on Wednesday. It is also listed in Frankfurt. 

Steinhoff’s annual report said the company was assessing the merits of and responses to the claims and no provisions had yet been taken as it was uncertain when, or if, it would have to pay. 

Steinhoff said last year it could issue shares to help to cover legal payouts related to the accounting fraud. 

The company has also been selling off assets as part of plans to transform itself into a retail holding company. 

But the annual report said Steinhoff now also has to contend with the impact of the coronavirus outbreak, which hurt its performance this year. 

Last week, the boss of Pepco Group, owner of British discount retailer Poundland, said the coronavirus crisis had delayed its sale by parent Steinhoff. 

The annual report said Steinhoff was yet to make a decision regarding the future of Pepco Group. The company is looking at options including a sale or initial public offering of the business. 

The company said its debt, which it restructured last year, stood at 9.6 billion euros during the period.

Show More

Related Articles

Back to top button
Close