Steinhoff bounces back as US business shrugs off bankruptcy

EDINBURGH — Is the worst over for embattled Steinhoff shareholders? The Steinhoff share price, which collapsed this time last year amid revelations that the German authorities were investigating financial irregularities, has perked up. The improvement appears to be linked to news that the US bedding company it purchased has exited bankruptcy and is in reasonable shape. Also pleasing market participants is that Steinhoff is finally getting rid of CEO Danie van der Merwe, a close associate of former CEO Markus Jooste. Van der Merwe has clung to his position until now although news has emerged that he has been involved in dodgy deals along with Jooste. His replacement, Louis du Preez, isn’t an outsider, but is seen as a better bet than Van der Merwe. – Jackie Cameron

By John Bowker and Janice Kew

(Bloomberg) – Steinhoff International Holdings NV’s battle to stabilise itself received a boost as troubled US bedding chain Mattress Firm emerged from bankruptcy with $525 million in funding to support operations.

The $3.8 billion acquisition of Mattress Firm in 2016 proved the final deal of an aggressive expansion drive that led to Steinhoff’s near-collapse amid an accounting scandal late last year. Of Steinhoff’s various chains around the world, including Conforama in France and Poundland in the UK, Mattress Firm proved among the toughest to keep afloat, and the business entered Chapter 11 bankruptcy in October.

A Steinhoff International Holdings NV logo
A Steinhoff International Holdings NV logo sits on display outside the company’s offices in Stellenbosch. Photographer: Waldo Swiegers/Bloomberg

Mattress Firm will will operate about 2,600 stores across the US after closing 660 during the bankruptcy process. The chain had expanded too aggressively, suffered from ineffective marketing and was embroiled in a dispute with suppliers, Steinhoff said in a presentation to creditors in London in September.

“This short process has enabled Mattress Firm to strengthen its balance sheet and optimise its store footprint, and it emerges as a stronger and more competitive company,” Steinhoff Chief Executive Officer Danie van der Merwe said in a statement on Thursday.

Steinhoff’s battered shares received a pick-me-up earlier in the week when the South African company announced that Commercial Director Louis du Preez will replace Van der Merwe as CEO, further distancing the company from the leadership of Markus Jooste, who quit in the wake of the scandal and has been referred to South African police.

The stock rose 5 percent in early trade in Johannesburg on Thursday, yet remains 96 percent below pre-scandal levels.

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