Poundland’s parent group Steinhoff International has started to lose credit lines from lenders, putting more pressure on the South African retailer’s shares as it grapples with an accounting scandal.
In a presentation prepared for lenders at a meeting in London on Tuesday, Steinhoff said the position of its operating companies, including Poundland, which it bought last year, as well as Harveys and Bensons for Beds in the UK, was “evolving daily” with credit insurance being cancelled or reduced and credit facilities being suspended.
It emerged on Friday that Poundland faces potential difficulties with suppliers after an insurance company reduced its cover on credit for those selling goods to the cut-price chain.
Steinhoff’s shares have dived more than 80% since the company admitted earlier this month that it faced criminal and tax investigations relating to an estimated $7bn (£5.3bn) hole in its accounts. They fell sharply again on Tuesday after the latest update.
PricewaterhouseCoopers has been investigating the accounting irregularities, linked to Steinhoff’s assets outside South Africa.
Steinhoff 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.
But Poundland’s boss Andy Bond told 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. He said the group planned to launch its Dealz chain, which currently operates in Ireland and Spain, in Poland in February.
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