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Poundland parent Steinhoff calls for €200m to stay afloat

South African retail giant Steinhoff International has started talks with potential lenders for the amount of €200m in a bid to stay afloat.

The company, who acquired Poundland in August 2016 for £610m, has been at the centre of a recent accounts scandal after it was revealed it would have to reissue its financial results as far back as 2002 following signs that “accounting regularities” were deeper than first expected.

Steinhoff has cautioned investors that “there can be no assurance that the company will be able to reach agreement with its finance providers on acceptable terms or at all,” despite South African banks pledging €60m to be paid out imminently.

The company has informed creditors that it expects to be able to meet interest payments on its €10.7bn debt pile, though not at penalty rates.

Shares in the company have fallen over 80%, wiping nearly £9bn of the its value.

The company also owns Harveys and Bensons for Beds in the UK.

A meeting with European lenders to help free up extra cash is scheduled for January 26th.


Poundland places 99p Stores into administration

Poundland has placed 99p Stores into administration, only two years after the company bought its rival for an estimated £55 million.

South African retailer Steinhoff, owner of the budget retail chain 99p Stores, has reportedly appointed AlixPartners to administrate the business, closing 60 stores across the UK with immediate effect.

“This appointment comes in support of Poundland Group Limited’s strategic decision to operate their entire retail estate under the Poundland fascia. No employees are affected by this appointment,” said a spokesperson for AlixPartners.

Job losses are thought to have been kept to a minimum as staff are set to be transferred across to neighbouring Poundland stores.

The 252 99p Store shops were bought by Poundland in 2015, ahead of the eventual takeover of Steinhof, with a plan to rebrand all outlets. However, 60 stores remained separate and were considered unprofitable by Poundland, reasoning that they were too close to existing stores.

In an interview with Retail Week, a spokesperson for the company said: “It’s no secret that the previous management of Poundland had difficulties digesting its 99p Stores acquisition.

“However, we’ve largely completed the store closure programme that addressed the remaining overlaps from that 99p acquisition.”

Poundland’s accounts for the year to March 27 2016 show pre-tax profits fell 19 per cent to £35 million, with profits falling at pre-existing Poundland stores and the rebranded 99p Stores branches incurring a pre-tax loss.

In July 2016 Steinhof announced that it had agreed a £450 million deal to take full control of Poundland, its first successful bid to take full control of a European company after failing to acquire Argos owner Home Retail Group and French retailer Darty.