Steinhoff crashes after Moody's downgrade
Steinhoff International’s crash resumed on Friday morning‚ with the share falling another 45% to R5.50‚ taking its plunge over the week to 90% from Monday’s opening price of R55.80.
On Thursday night‚ Moody’s cut Steinhoff’s credit rating from investment grade Baa3 to four notches into junk at B1‚ placing it straight into “highly speculative” without passing through the three rungs of “speculative”.
“Given that allegations of accounting irregularities were raised and rebutted in August and again in November‚ it calls into question the quality of oversight and governance at Steinhoff‚” Moody’s said in its note.
Moody’s also warned that it was placing Steinhoff on review for a further downgrade.
“Moody’s review will focus on the findings of Steinhoff’s supervisory board investigation into accounting irregularities and the consequences for the company’s credit profile‚” the ratings agency said in its note.
“Should further details of the accounting irregularities put additional pressure on Steinhoff’s financial condition‚ this could lead to further downward pressure on the ratings.
“Incorporated in the Netherlands‚ Steinhoff is a vertically integrated retailer servicing value-conscious consumers and investing in complementary businesses. Steinhoff is a parent company‚ with full ownership of Mattress Firm Holding Corporation and Steinhoff Finance Holding‚ with the latter housing its operating assets in Europe‚ the UK and Asia Pacific.
“Steinhoff also fully owns Steinhoff Investment Holdings Limited‚ which houses its African operating assets‚ including its 76.81% investment in Steinhoff Africa Retail Limited.”