Troubled Poundland owner Steinhoff calls in AlixPartners

22 December 2017 Authored by Consultancy.uk

International retail conglomerate Steinhoff has appointed two advisory firms, as it attempts to deal with major financial difficulties. The group’s shares plunged last week, following the disclosing of the company’s accounting problems, with Moelis and AlixPartners advisors being drafted in ahead of crunch meetings with lenders in December.

Despite the measures taken by the beleaguered conglomerate, creditors remained unconvinced, and promptly deserted the South African company. The group, which owns the famous UK high street discounter Poundland, had announced the appointment of US investment bank Moelis in order to advise the company on talks with its lenders, a day before make-or-break talks with financers, while management consultancy AlixPartners was asked “to assist on liquidity management and operational measures”. 

More than $14 billion was wiped off the market value of the Johannesburg and Frankfurt-listed group earlier in the month, after Steinhoff announced that it was ordering an independent investigation into its accounts, and said its CEO was leaving. Shares have dived more than 80% since the company admitted earlier this month that it also faced criminal and tax investigations relating to an estimated $7 billion hole in its accounts. They fell sharply again on December 19th, after the latest update.Troubled Poundland owner Steinhoff calls in AlixPartners

“The group is currently fully focused on safeguarding operational liquidity to continue funding existing operations throughout its various subsidiaries,” the company said, before the major meetings, adding, “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 stabilization of the group’s financing.”

Following the further setback, Steinhoff commented that it could not provide further details on the magnitude of the problem, or when it could produce audited accounts for 2017 and restated accounts for last year. The company said others years’ accounts might also need to be restated.

The group becomes the latest in a line of global retailers who have enlisted AlixPartners to aid turnaround efforts. Earlier in the year, US-based Bon Ton tapped the firm, while the Croatian government appointed the firm to help the nation’s largest employer, Agrokor, with restructuring.

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