Moody’s Investors Service has announced that it has downgraded the issuer ratings of Steinhoff International Holdings N.V. (Steinhoff) and Steinhoff Investment Holdings Limited, and the senior unsecured notes rating of Steinhoff Europe AG by four notches to B1 from Baa3.
In addition, Steinhoff Investment Holdings Limited's national scale long-term issuer rating was downgraded to Baa3.za from Aa1.za. All ratings were simultaneously put under review for further downgrade, Moody’s said.
The move follows the announcement earlier this week that the Poundland owner was launching an investigation into accounting irregularities within the company.
Uncertainties
‘The downgrade of Steinhoff's ratings and review for further downgrade reflect the uncertainties and implications for the company's liquidity and debt capital structure arising from an announcement by Steinhoff's Supervisory Board on 6 December 2017,’ Moody’s said in a statement.
‘The Supervisory Board advised that new information has come to light which relates to accounting irregularities requiring further investigation with the possibility of restatement of prior years' financial statements. […] Given that allegations of accounting irregularities were raised and rebutted in August 2017 and again in November 2017 it calls into question the quality of oversight and governance at Steinhoff.’
Independent Investigation
PwC is currently carrying out an independent investigation at Steinhoff, with the company saying that it plans to publish its audited 2017 consolidated financial statements ‘when it is in a position to do so’.
‘Moody's review will focus on the findings of Steinhoff's Supervisory Board investigation into accounting irregularities and the consequences for the company's credit profile,’ Moody’s said.
‘Should further details of the accounting irregularities put additional pressure on Steinhoff's financial condition, this could lead to further downward pressure on the ratings.’
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
