Poundland parent company Pepkor Europe’s chief operating officer Sean Cardinaal said the subsidiary has financially “severed any kind of alliance” with Steinhoff through a newly secured £180m loan.
Speaking to Retail Week, Cardinaal said that Pepkor Europe’s two-year loan from US investment firm Davidson Kempner afforded the value retailer freedom from its beleaguered owner Steinhoff.
“For us, the top priority from a financial perspective was to get independence and sever any kind of alliance with the Steinhoff group,” he said.
“The fact that we now have that independence allows us to focus on keeping up momentum in the really good operating companies that we have.”
The £180m loan will be divided between Poundland, its European division Dealz, value fashion chain Pep&Co, Eastern Europe retail chain Pepco and Steinhoff stablemates Bensons for Beds and Harveys.
Cardinaal said that how the funds would be divvyed up was yet to be decided.
A comfort to creditors and suppliers
He added that Pepkor Europe’s immediate priority was to reassure credit insurers, which reduced Poundland’s cover and cut Harveys’ and Bensons’ last month.
“This loan should give comfort to credit insurers and for individual suppliers as well. There has been some disruption to supply, which has been limited, but the suppliers that have been quite harsh and almost unreasonable in their approach will have to work very hard to win back our trust,” he said.
Cardinaal added that Poundland’s like-for-like sales were up 5.6% over the Christmas period, which he insisted should alleviate suppliers’ concerns.
Is a sale on the cards?
Cardinaal did not rule out a potential sale of some or all of Pepkor Europe’s retail companies from Steinhoff.
“Ownership is not top of mind right now. But if you are running successful businesses which are stable, regardless of what could be perceived as a distressed situation outside of your control, that makes you an attractive prospect,” said Cardinaal.
“We are not dressing the bride or executing on our current strategies because they make us attractive to potential new owners. But we needed stability to execute on them well and we have that now.”
In November, Cardinaal outlined audacious expansion ambitions to Retail Week, including plans to roll out up to 1,000 Dealz stores in Europe over the next five years.
However, in the wake of Steinhoff’s accounting scandal and subsequent 90% nosedive in value, the appetite for this expansion has been scaled back.
“Our ambitions are as big as they were but it would be naïve to say it is completely business as usual,” said Cardinaal.
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