Steinhoff shares recovering fast

Published Dec 12, 2017

Share

JOHANNESBURG - Steinhoff International rose more than 50percent on the JSE yesterday after the group announced measures to return the retail giant into stability.

The shares closed 55.83percent up at R9.35 following a week of rout that saw the stock battered from R50.50 to R6 at the close of the market last Friday after the international retail giant admitted to accounting irregularities dating back from December 2015.

The bloodbath also cost the company $14 billion (R190.4bn) in market recapitalisation leading to former chief executive Markus Jooste resigning his post.

The JSE All Share Index, which dropped by 1.7percent on the first day of Steinhoff decline was also up by almost 0.20percent yesterday morning to 58116.71 points.

BayHill Capital equities trader Jordan Weir said the positive news played a supportive role in yesterday’s share price recovery.

Also read: Rand stronger, Steinhoff lifts the bourse

Weir said factors such as short-positions being covered in the market also contributed to the price movement.

“To a large degree, I think this is what we have seen with respect to Steinhoff’s robust share price move today,” Weir said. “Short sellers are locking in some profits.”

He said Steinhoff also helped the all share index.

“There was an undercurrent of strength initially on the JSE during the morning, but this would not necessarily have been due to Steinhoff’s move at all,” Weir said. “Since it was a massive drop in market value after the announcement of an investigation into irregular accounting practices, Steinhoff’s market capitalisation currently stands as an immaterial weight on the JSE All Share index, which would not suggest that it made any form of contribution to the Alsi’s move on the day.

“In fact, the Alsi eventually started to show signs of weakness throughout the day, proving the above-mentioned premise.”

Reassure

Steinhoff’s appointed US Investment bank Moelis & Company and AlixPartners with immediate effect in a bid to reassure the investors that it was serious about stabilising its business. It said Moelis would support and advise on the group’s discussions with its lenders while AlixPartners would assist on liquidity management and operational measures.

Steinhoff also postponed its regular annual meeting with the lenders to next Tuesday.

“The purpose of the meeting will be for the group to provide an update on its ongoing operational and financial situation. An agenda for the meeting will be circulated ahead of December 19,” the group said.

Steinhoff said it was currently fully focussed on safeguarding operational liquidity to continue funding existing operations throughout its various subsidiaries.

“In this context, the group is asking for and requires continued support in relation to existing facilities from all its lenders to achieve an immediate stabilisation of the group’s financing,” it said.

Since the turmoil, Steinhoff supervisory board has appointed chairperson Christo Wiese as interim executive chairperson and Pieter Erasmus as executive. The board also set up a subcommittee consisting of independent non-executive directors led by Johan van Zyl. Other members include Steve Booysen and Heather Sonn.

Yesterday, the JSE said it recognised the serious impact the recent disclosures by Steinhoff International regarding accounting irregularities has had on investors.

The bourse said it had also launched an investigation to determine if there were any breaches of its listing requirements.

“With all of the information currently at our disposal, the JSE remains of the view that Steinhoff International’s listing on the JSE should not be suspended and that trading in its shares be allowed to continue,” the JSE said.

- BUSINESS REPORT 

Related Topics:

steinhoffscandal