Poundland’s owner company Steinhoff has kicked off restructuring talks with its lenders to address the group’s “critical” debt position.
The beleaguered South African retail conglomerate held a crunch meeting with lenders including Citigroup and Bank of America in London today where it said “the liquidity position of the group’s key finance companies is not sustainable beyond the next few months”.
The retail group, which also owns Harveys, Bensons for Beds and Pep&Co in the UK, said “the current situation is fragile and the need for a solution in the short term is critical” because of its outstanding debt of €10.4bn
Steinhoff added that its “operating companies’ trading is suffering as a result of the uncertain situation”.
Documents presented at the meeting show that Steinhoff has ranked the marketability of its current business portfolio. The business has given Poundland one of a possible three ticks in terms of its current marketability, while Harveys and Bensons have received none.
The retail group has said that there is “significant value” in its Poundland and Conforama businesses and that it’s Pepco and South African subsidiary are both “very valuable.”
Retail Week understands that Poundland, which had its credit insurance cut in December, has struggled to regain credit cover in the following months despite securing a £180m loan independent of Steinhoff in January.
Poundland is understood to have achieved like-for-like growth of over 2% in the first half of its current financial year, while its Polish stablemate Pepco has achieved like-for-like sales growth of around 9%.
It is understood that the Steinhoff subsidiary that Poundland sits under, Pepkor Europe, generated sales growth of more than 10% during the period, with pre-tax profit up around 30%.
Steinhoff is expected to unveil interim results on June 29 and has warned that it is likely to make a post-tax loss for the first half of the year, with overall sales anticipated to edge up 1% across the group.