Troubled South African retailer, Steinhoff , has said it had raised 4.8 billion rand (332 million dollars) from the sale of its 26 per cent stake in KAP Industrial to pay off debt and shore up its finances, sending its shares higher.
Steinhoff admitted “accounting irregularities” in December 2017, shocking investors who had backed its reinvention from a small South African business to a multinational retailer at the vanguard of the European discount furniture retail industry.
This wiped about 85 per cent off its market value and threw the company into a liquidity crisis.
Steinhoff said in a statement it sold 694 million KAP shares at 6.85 rand per share, a 9.4 per cent discount to Tuesday’s closing price. The book of demand was oversubscribed, it added.
Steinhoff said on Tuesday the placement would be offered to institutional investors only and will result in the company no longer holding an interest in KAP.
Steinhoff shares jumped in early trade on the Johannesburg Stock Exchange and were up more than six per cent by 0725 GMT.
Shares in KAP, a diversified industrial group selling everything from chemicals and auto components to mattresses, were down more than seven per cent.
In South Africa’s biggest corporate scandal, an investigation carried out by PwC found that Steinhoff recorded fictitious or irregular transactions totaling 6.5 billion euros (7.3 billion dollars) over a period covering the 2009 and 2017 financial years.
Steinhoff sold down its stake in KAP in March 2018 after placing 450 million shares or a 17 per cent stake, also via an accelerated book build in a bid to plug a liquidity gap.
Steinhoff has also raised cash from the sale of stakes in South African investment firm, PSG Group, French online retailer, Showroomprive.com, as well a property in Austria.