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For the second time in weeks, Moody’s, a top ratings agency, has lowered the credit rating of Steinhoff, the embattled retail giant.
Steinhoff owns Bensons for Beds and Poundland in the United Kingdom. Earlier this month, it was downgraded by Moody’s when the agency emphasised “the uncertainties and implications for the company’s liquidity and debt capital structure.”
The South African corporation has been thrown into turmoil after admitting to irregularities in its accounting. Markus Jooste, the chief executive of the firm, immediately resigned after the said announcement, and the shares of the company drastically dropped by 90 percent.
Read also: Shares of Steinhoff Sink Again
The company will be required to restate its 2016 accounts, and it has appointed advisers to aid with its operations, and its discussions with lenders. The retailer has now named Danie van der Merwe as the new chief executive of the company. Van der Merwe met with lenders before Christmas in order to offer reassurance.
In another hit for the company, Moody’s has now downgraded Steinhoff to a rating of Caa1, which is a sign of a potential default.
In a statement, the agency 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.”
The agency warned that the operating companies of Steinhoff have been struck with reductions and cancellations of their credit insurance during the past weeks and that credit facilities were being withdrawn and suspended.