Moody's downgrades Steinhoff by 4 notches

Lloyd Doyle
December 8, 2017

Shares in Steinhoff, the owner of Poundland, have lost around 90 per cent of their value in a week after the South Africa-listed firm plunged for the third straight day.

"Incorporated in the Netherlands, Steinhoff is a vertically integrated retailer servicing value-conscious consumers and investing in complementary businesses".

Steinhoff said earlier Thursday that accounting irregularities it disclosed Wednesday along with the resignation of its CEO could affect the valuation and "recoverability" of as much as $7.09 billion worth of assets-extending a stock market rout that has sent shares down 74% over two days.

The reason for the downgrade was due to uncertainties and implications for Steinhoff's liquidity.

The company, which recently became a star of the Johannesburg Stock Exchange (JSE) as it gobbled up various European retailers, is the subject of an investigation into accounting irregularities in Germany.

The company has been accused of inflating earnings and covering up losses.

On Thursday night, Moody's cut Steinhoff's credit rating from investment grade Baa3 to four notches into junk at B1, placing it straight into "highly speculative" without passing through the three rungs of "speculative".

The pain does not stop at Wiese, however.

Gigaba said he had requested the Financial Services Board, Public Investment Corporation, and the Government Employees Pension Fund to provide him with a report on the extent of exposure for retirement funds.

He said he had asked for investigations by the Dutch Authority for the Financial Markets, Germany's Auditor Oversight Body and the Independent Regulatory Board of Auditors in South Africa into whether whether Deloitte in Germany or South Africa had complied with global audit standards.

Finance Minister Malusi Gigaba said he "notes with grave concern" the developments at Steinhoff. The FSB said it would take action if any violations were found.

Steinhoff shares were trading at R6.25 on the JSE at around 10:30.

Other reports by Iphone Fresh

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