Steinhoff Falls as PwC Probe Delayed a Year After Crisis Began

(Bloomberg) -- Steinhoff International Holdings NV tumbled after the global retailer said the results of a forensic investigation by auditors PwC will be delayed. The news comes exactly a year after the disclosure of accounting irregularities and the resignation of its CEO threw the company into crisis.

The findings of the probe were postponed until the end of February, while the release of earnings for both last year and fiscal 2018 were pushed out to mid-April, the company said Thursday, dashing its efforts to publish audited results for 2017 by the end of this year.

The extension is likely to frustrate investors who lost money in the Steinhoff collapse, including pension funds. The company has shed some 12.2 billion euros ($13.8 billion) of market value since reporting the accounting issues last December. The stock fell as much as 26 percent to 9 cents early in Frankfurt, the lowest since July 2.

“While substantial progress has been made, the volume and complexity of the work required, including the interactions between the various parties, has been significantly greater than initially anticipated,” Chairwoman Heather Sonn said in a statement. Even so, the payment delays that have been negotiated with bondholders and lenders will not be affected by the extensions, said Sonn, who stepped into her role shortly after the collapse.

While she and many of her colleagues have worked around the clock to keep the global retailer afloat, former Chief Executive Officer Markus Jooste has led the mostly quiet existence of a retired multimillionaire since quitting abruptly a year ago. He's made only one public appearance in an official capacity -- to face questions in parliament in September about his role in the crisis -- before retreating back into a life of relative normality.

Jooste built Steinhoff into a global retailing giant in the past decade with acquisitions including Conforama of France, Britain's Poundland and Mattress Firm of the U.S.

Read here for more on former CEO Jooste's life since quitting Steinhoff

The delay suggests that Steinhoff's accounting issues are “even deeper and more problematic than first thought,” said Charles Allen, a London-based retail analyst at Bloomberg Intelligence. “It still seems there will be little remaining for equity investors after debt-restructuring.”

PwC's probe is focused on inflated profit and asset values, as well as off-balance-sheet deals with third parties. While investors and regulators are keenly awaiting the conclusions of the investigation, the company will be circumspect about what information it makes public. The overview that Steinhoff finally releases will make sure “the legally privileged nature of the report is not undermined and its position in the various pending legal and other proceedings is not jeopardized,” it said.

--With assistance from Renee Bonorchis.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Frank Connelly, John Lauerman

©2018 Bloomberg L.P.