Poundland’s owner secures loan to reduce dependence on struggling Steinhoff

Poundland’s European owner Pepkor said the loan will help UK operations and fund future investment

Poundland reported on Wednesday that it had enjoyed its most successful Christmas since it began (PA)

Poundland’s European owner has secured a £180m loan from a US hedge fund to reduce dependence on its troubled South African parent Steinhoff and reassure spooked suppliers.

Pepkor Europe, which owns Steinhoff’s European discount stores, said that it will no longer have to rely “on working capital support from parent company Steinhoff International”.

The two-year loan facility, provided by US investment management firm Davidson Kempner, will help Pepkor to support its UK operations and fund future investment.

Pepkor said the loan would provide stability for its retail brands and that it was “business-as-usual” in its stores, as well as for its 29,000 employees across Europe.

It also said that a proportion of the loan facility would be made available to Harveys and Bensons for Beds – which are owned by Steinhoff but fall outside of the Pepkor umbrella – to support the future growth of those businesses in the UK.

Andy Bond, chief executive of Pepkor Europe, said the company was “firing on all cylinders, adding customers and growing market share”.

“Because of this strength, despite the ongoing issues faced by our parent company, we have been able to work quickly over Christmas to activate new sources of funding that will enable us to reassure suppliers, implement our investment plans and secure the future of these successful businesses,” he said.

Poundland reported on Wednesday that it had enjoyed its most successful Christmas since it began trading in 1990, with sales growing at 5.6 per cent for the 12 weeks to 24 December.

South-African retailer Steinhoff is embroiled in an accounting scandal that has wiped millions off the value of the firm and seen a number of senior executives resign.

Shares in the firm have plummeted almost 90 per cent since it admitted earlier in December that it was being investigated for “accounting irregularities”.

On 5 December, CEO Markus Jooste stepped down.

Later in the month, the group’s chairman and largest shareholder, Christo Weise, resigned.

On Tuesday, the group said that it would likely have to restate its financial reports for years prior to 2015 too. Previously it had said that the accounting irregularities only went back as far as 2016.

Last week, Moody’s slashed its rating for the company for a second time in the space of a month and warned of the possibility of further downgrades. A lower credit rating means that a company is deemed less likely to be able to service its debt.

Pepkor Europe owns Poundland, as well as retailers Dealz in Germany, Pep&Co in Western Europe and PEPCO in Eastern Europe.