November 19, 2018 / 11:17 AM / a year ago

Steinhoff promotes commercial director to CEO, shares leap

JOHANNESBURG (Reuters) - Steinhoff has appointed commercial director Louis du Preez, a key figure in its attempts to recover from a financial crisis, as its permanent chief executive, sending shares in the South African retailer as much as 15 percent higher on Monday.

Two Mattress Firm stores, a brand owned by Steinhoff, lie on either side of the street in Encinitas, California, U.S., January 25, 2018. REUTERS/Mike Blake

Du Preez will replace acting CEO Danie van der Merwe, who will step down at the end of December, a year after the retailer revealed a multibillion-dollar hole in its finances.

“It is not too surprising who they have gone for given his role in driving the restructuring and this would be seen as a positive,” said Mark Hodgson, equities trader at Avoir Capital Markets.

At 1355 GMT, Steinhoff’s shares were up 8.7 percent at 1.99 rand, after earlier trading a higher as 2.14 rand.

Du Preez joined the Steinhoff group in mid-2017 and was nominated as commercial director and member of the management board on Dec. 19. He has jointly led negotiations in the restructuring of the group, the retailer said.

Steinhoff’s former permanent CEO Markus Jooste, who resigned after the scandal broke, is being investigated by South African authorities over the crisis that wiped more than 90 percent off the company’s market value and forced it to sell assets.

Creditors agreed in July to hold off on their debt claims for three years, throwing the company a lifeline and giving it three months to start restructuring its debt.

Steinhoff in October asked creditors for a one-month extension while it negotiates documents required for the restructuring.

“He is the ideal candidate to lead the company through the final stages of the restructuring and into the next phase of its development,” Chairperson Heather Sonn said of du Preez.

Steinhoff also said it planned to launch a so-called company voluntary arrangement (CVA) in relation to its Steinhoff Europe AG (SEAG) business.

CVAs allow retailers to avoid insolvency or administration by offloading unwanted stores and securing reduced rents on others. They have been adopted by British groups including fashion chain New Look.

The SEAG business includes home furnishings chain Conforama, Pepco and variety store chain Poundland among others.

Additional reporting by Patricia Aruo; Editing by James Macharia and Mark Potter

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