Steinhoff raises $332m to meet financial obligation

Troubled South African retailer Steinhoff has raised R4.8 billion ($332 million) from the sale of its 26 percent stake in KAP Industrial in less than 24 hours after it announced plans to sell its shares in the diversified industrial business.

“Steinhoff intends applying the proceeds from the sale to meet its various obligations, including, but not limited to, those arising from its announced debt restructuring process, and to ensure its business platforms are appropriately funded,” the company said on Tuesday.

The retailer decided to sell all of its 694, 206, 661 shares in the holdings in order to meet its various financial obligations which include those arising from its debt restructuring process and to ensure that its business platforms are “appropriately funded”.

This comes a year after the company sold down its stake in KAP in March 2018 after placing 450 million shares, or a 17 percent stake, also via an accelerated bookbuild in a bid to plug a liquidity gap.

Steinhoff has been in the news since 2017 after it admitted to accounting irregularities. This was shocking to investors which led to its shares crashing by 85 percent and throwing the company into a liquidity crisis.  The wealth of billionaire businessman Christo Wiese was erased by more than half and the pension funds of millions of South Africans were affected. Thousands of jobs have also been destroyed due to the Steinhoff scandal.

The Steinhoff saga is possibly the biggest case of corporate fraud in South African business history.