Poundland and Harvey’s could be sold as their owner runs out of cash
Credit Agency Moody's has downgraded Steinhoff's credit rating over fears it can't afford its European operations
ONE of the UK's biggest budget retailers could be sold after experts warned its owner may run out of cash.
South Africa's Steinhoff, which owns Poundland and other well-known high-street stores, is in the midst of a full-blown crisis, which was sparked by revelations of accounting irregularities earlier this month.
Shares in the firm fell by 60 per cent after it announced an investigation into the issue, with chief exec Markus Jooste resigning as it delayed publishing its full-year results.
As well as Poundland, the firm owns Harvey's Furniture, Bensons for Beds and Pep&Co.
And in a further blow, credit agency Moody's has warned the company may not have enough cash to keep its European businesses afloat - and could be forced to sell some of its high street names.
Slashing its credit rating from B1 to Caa1, Moody's said: "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."
Steinhoff has 1.47billion euros of debt maturing next year, and the investigation into accounting irregularities could "make it challenging to either repay or refinance", Moody's added.
Moody's is one of three big credit rating agencies, which assess how easily a borrower - such as a company or a country - is able to repay their debts.
Steinhoff, which operates 12,000 outlets across 30 countries, only bought Poundland in 2016 for £597million, after it lost out in a battle with Sainsbury's to take over Argos owner Home Retail Group.
In a statment on its website, the firm said: "Steinhoff remains in discussion with the group’s lenders seeking their on-going support, as well as further funding for the group to meet short-term liquidity needs and enhance the stability of the group’s operations."
Last week, Steinhoff installed an acting chief executive, Danie van der Merwe, following the resignation of Jooste.
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Steinhoff's chairman, the South African retail billionaire Christo Wiese, had been acting as executive chairman following Mr Jooste's departure, but resigned in order to "address any possible conflict of interest that may exist".
Mr Wiese's Brait investment group owns stakes in Virgin Active, New Look and food chain Iceland.
The Sun Online has contacted Poundland, Harvey's and Benson for Beds for comment.
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