The share price of embattled retail group Steinhoff plummeted on Thursday morning despite raising €257m (R4.9bn) in capital via the placement of shares in low-cost retailer Pepkor.
It was down 20.45% to R0.35 by 10.37am, adding insult to injury to Wednesday’s decline of 12% and the 64.20% plunge on December 15. It share price is down 90.35% in the last year.
Steinhoff, valued at R1.5bn on the JSE, placed the Pepkor shares at R18.50 a piece as it stares down a €10bn (R190.5bn) debt burden.
Placement shares are offered to a select group of investors determined by a bookbuilding process, which involves collecting bids from investors for how many shares they want to buy and what price they are willing to pay, to help the company receive the highest price.
The 265-million placement shares accounts for about 7.2% of Pepkor’s issued shares, Steinhoff said on Thursday.
Its ownership in Pepkor, which it continues to view as a strategic investment, will now be reduced from 51% to 43.8%.
The placing will also increase the free float of Pepkor from about 49% to 56.2%. Free float is the portion of a company’s share that can be publicly traded.
The group’s €10bn debt is due in June and it is in complex negotiations with lenders for a longer period. It has offered them 80% of the group’s equity in exchange for a restructuring of what it owes.
Steinhoff has been fighting for its survival since accounting fraud at the firm was revealed in December 2017, when it came to light that it had misstated both profit and asset values.
Former CEO Markus Jooste is among a group of four former Steinhoff executives who will go on trial in Germany, where the company has its primary listing, in early May for the fraud.
Since the company’s auditors refused to sign off its accounts in late 2017, it has lost more than 99% of its value and was worth about R240bn at one stage.
With Katharine Child
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.