Steinhoff is paying experts R5.4 million a day to sort out its financial mess - and it may get worse
- Steinhoff published unaudited and heavily-disclaimed interim financial results on Friday afternoon.
- The numbers show it has been paying lawyers, auditors, and advisors an average of some R5.4 million per day as they work to unscramble its "alleged accounting irregularities".
- And those costs are still going to "increase substantially".
The embattled Steinhoff International group on Friday afternoon published interim financial results that provided a glimpse into how much cash it is burning as it scrambles to sort out its books, and stay afloat.
Steinhoff reported that it had paid €39 million, or the equivalent of nearly R650 million, in professional fees over a period of four months, up to the end of March.
That is the equivalent of R5.4 million per day, on average.
The payments went to PwC, which is investigating what Steinhoff refers to as "alleged accounting irregularities", to auditors Deloitte, to lawfirms Linklaters and Werksmans, and consultants including Moelis and AlixPartners.
“These professional fees are expected to increase substantially until such time as the restructure plan has been finalised and the relevant agreements have been concluded,” Steinhoff warned.
While the advisors and lawyers are being paid, major creditors have agreed to wait longer for their money.
READ: Steinhoff lost R80 million on the sale of its brand new company jet - 6 other things we've learned from its results
Earlier on Friday Steinhoff announced that the holders of between 79% and 94% of various types of debt at various levels of its group had agreed to extend the validity of "support letters" until at least 20 July.
On Wednesday Steinhoff had warned that failure to secure that extension of the credit-standstill would or it consider "local reorganisation procedures" – read as a reference to the potential liquidation of at least some of its subsidiaries.
Steinhoff also earlier on Friday said it had "reached agreement on the key commercial terms for the restructuring plan" with its creditors, and could be releasing details of that plan soon.
Ordinary customers were apparently not showing much trust in such plans. In areas of business where it requires deposits before delivering goods much later, such as building kitchens and big pieces of furniture, consumers had been scared off doing business with it, Steinhoff said.
Just how bad things are at Steinhoff is not yet clear. The interim results were heavily disclaimed, making it clear that PWC had no hand in their creation. The company's management also warn the numbers “could be affected or contradicted” by what comes out of investigations.
PWC is “on track to deliver a final report” on its alleged accounting irregularities – “by the end of the 2018 calendar year”," Steinhoff said.
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