Steinhoff International— the parent company of Poundland, Harvey’s and Bensons for Beds in the UK — has started to lose credit lines from lenders as it grapples with an accounting scandal.
In a meeting for lenders in London on Tuesday, the embattled South African retail group said the position of its companies, including Poundland which it bought last year, was “evolving daily”.
It acknowledged that credit insurance was being cancelled or reduced and said that credit facilities were being suspended.
This has put further pressure on the group’s already plummeting shares, The Guardian reported.
The furniture group said it was still unable to determine the scale of accounting irregularities, which have wiped more than $10bn off its market value over the past two weeks.
The emergence of the accounting crisis prompted the departure of chief executive Markus Jooste and billionaire chairman Christo Wiese, the company’s largest shareholder, and triggered an 85% plunge in the share price.
The group said on Tuesday it could not provide further detail on the magnitude of the problem or when it could produce audited accounts for 2017 and restated accounts for last year.
The company said others years’ accounts might also need to be restated.
PWC has been investigating the accounting irregularities, linked to Steinhoff’s assets outside South Africa.
However, Poundland boss Andy Bond did tell creditors that the business was trading well with sales at established stores increasing by 4% in the period since the end of March compared to last year.
It emerged earlier this week that Poundland is facing potential difficulties with suppliers after an insurance company reduced its credit cover.
Steinhoff has appointed its chief operating officer Danie van der Merwe as interim chief executive, while Conforama boss Alexandre Nodale will serve as his deputy in a new four-member management board.