Disgraced retail international holding company Steinhoff has established a board subcommittee to bolster independent governance following the resignation of CEO Markus Jooste over accounting irregularities which are being investigated.
In a note to shareholders issued on Monday morning, the group announced that it has taken several actions following Jooste’s resignation last week.
German authorities are investigating “four current and former managers of a group” for possible accounting fraud, but would not name those in question. Steinhoff has approached auditing firm PricewaterhouseCoopers to investigate the irregularities as well.
The share price plummeted as much as 91% last week, and the firm lost as much as R282-billion, City Press reported.
The statement indicated that a board subcommittee, consisting of independent nonexecutive directors, is to be headed by Sanlam’s former CEO Johan van Zyl. Other members include Dr Steve Booysen from the University of Pretoria’s School of Accountancy and Heather Sonn, managing director of Gamiro Investment Holdings.
The group’s audit committee is also working with Deloitte to ensure the release of its audited financial statements, which the group confirmed have been put on hold. The note also confirms that PwC has commenced its investigation.
Despite the challenges, trade will continue. “Trading in the underlying businesses across the globe continues uninterrupted particularly in the pre-Christmas period,” the note read.
Global investment bank Moelis & Company has been appointed as an international advisory team, and consulting firm AlixPartners has been appointed operational adviser.
“Moelis will support and advise on the group’s discussions with its lenders, while AlixPartners will assist on liquidity management and operational measures,” the group said in a separate note to shareholders.
LENDERS
The group is focusing on “safeguarding operational liquidity” to continue funding its existing operations. The group appealed to lenders and its existing facilities to continue their support of the group to “achieve an immediate stabilisation” of its financing.
The group also postponed its meeting with lenders meant for December 11 to December 19. The topic of discussion will be to provide an update on its operational and financial situation.
With Steinhoff taking a beating, there are concerns that investor the Government Employee Pension Fund (GEPF) is also at risk.
Finance Minister Malusi Gigaba has asked for a report indicating the extent of exposure to the GEPF.
The Steinhoff share price opened at R6.97 and fell to R6.00 by 09:15 on the JSE on Monday.