Steinhoff said that Conforama’s expenses increased due to store openings, marketing campaigns and other projects initiated before the crisis erupted.
Sunday 14, April 2019
(Bloomberg) --Steinhoff International Holdings said its struggling French furniture retail unit Conforama raised about EUR 316 million ($357 million) to help fund the business amid a mounting debt load.
The fundraising took place as the South African retailer announced Deputy Chief Executive Officer Alexandre Nodale, who is also CEO of Conforama, is giving up those roles.
Steinhoff stated that sales at Conforama significantly deteriorated between 2017 and 2018, while Steinhoff was battling for survival following an accounting scandal that is wiped more than 96 per cent off its market value.
The unit’s net debt was EUR 1.72 billion at the end of last year, outstripping its equity and the vast majority of the debt is owed to other entities within Steinhoff.
The fundraising places Conforama at the forefront of Steinhoff’s struggle to stabilise after the unveiling of accounting wrongdoing in December 2017.
The South African parent company has yet to report audited financials for the 12 months through September of that year, as auditors struggle with the complexity of revaluations and the profitability of various subsidiaries.
Nodale, who gave up the deputy CEO role at Steinhoff last week, will remain as CEO of Conforama only until the unit’s long-term financing is finalised. After that, Helen Lee Bouygues will become chairwoman with Cedric Dugardin as the CEO.
Steinhoff has offloaded several assets, including Austrian furniture chain Rudolf Leiner and stakes in firms such as KAP Industrial Holdings. Conforama may also be for sale and it’s considering thousands of job cuts, Paris-based BFM and Le Figaro said in February.
Other assets owned by Steinhoff include US bedding chain Mattress Firm, bought for $3.8 billion in 2016 as part of an aggressive expansion drive. That firm filed for bankruptcy last year, and flirted with collapse before securing $525 million in funding to support operations.