Moody's cuts rating of Poundland owner Steinhoff for second time in weeks

Helen Cahill
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Top ratings agency Moody's has downgraded the credit rating of embattled retail giant Steinhoff for the second time in weeks.

Steinhoff, which owns Poundland and Bensons for Beds in the UK, was downgraded by Moody's earlier this month, when the agency highlighted "the uncertainties and implications for the company's liquidity and debt capital structure".

Read more: Poundland owner Steinhoff has hired a new CEO

The South African conglomerate has been thrown into turmoil after admitting to accounting irregularities. The firm's chief executive Markus Jooste resigned immediately after the announcement, and shares plunged by 90 per cent.

The firm will need to restate its 2016 accounts, and has appointed advisers to help with its operations, and discussions with lenders. The retailer has now appointed Danie van der Merwe as its new chief executive, who met with lenders before Christmas to offer reassurance.

In another blow for the company, Moody's has now downgraded Steinhoff to a Caa1 rating, an indicator of a possible default.

"Steinhoff's liquidity levels could prove insufficient to sustain its European operations in the near term if it is unable to shore up its cash balances or other sources of liquidity," the agency said in a statement.

Moody's warned that Steinhoff's operating companies have been hit with reductions and cancellations of their credit insurance in recent weeks, and that credit facilities were being withdrawn and suspended.

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