Steinhoff says cash "dried up" following accounting scandal

South Africa’s Steinhoff International said its working capital “dried up” and revenue from its multinational retail operations fell in the first quarter after it became embroiled in an accounting scandal.

The retailer has been fighting for survival after it discovered accounting irregularities in December which sparked a sell-off in the shares that wiped more than $10 billion off its stock market value and led to multiple investigations globally.

Revenue for the period to end-December fell by 5 percent to 4.86 billion euros ($6 billion).

“The group’s essential working capital, especially in its businesses outside of South Africa, largely dried up as the access of our operating businesses to their banking facilities and other credit lines was severely constrained,” the company’s acting chairwoman, Heather Sonn, said in a statement.

Steinhoff was “working hard to uncover the truth and to prosecute wrongdoing” and was also cooperating with regulators, she said.

The company, which owns more than 40 retail brands around the world including Conforama, Mattress Firm and Poundland, also said many of its international businesses, particularly its European businesses, were at risk of failing to meet their financial obligations.

Sonn said the group, which has suspended dividend payouts until after the end of June to convince creditors to waive some payments, is engaging with lenders over the coming months.

“These waivers are intended to create a window of stability to enable management to consider the group’s financial indebtedness in conjunction with the group’s financial creditors,” said Sonn.

Roughly 2 billion of Steinhoff’s 10.7 billion euros in debt matures this year.

The firm warned in January that it will have to restate its 2015 accounts and maybe earlier figures, having already cautioned on its 2016 numbers. A review being carried out by auditors PwC suggested that accounting irregularities may stretch beyond 2015.

PwC has already conducted interviews with certain group executives, both current and former, and has collected raw data from computers, cell phones, servers and documents.

“It is not possible at this stage to provide any definitive timing for conclusion of the PwC investigation,” said Sonn.

A Dutch court last week ordered Steinhoff to amend its 2016 accounts, handing victory to a former business partner in a dispute over the ownership of discount furniture store chain POCO.

Steinhoff’s share price closed up 0.35 percent to 5.80 rand, down more than 80 percent since the scandal broke and its chief executive resigned in December. The company’s trading statement was released after markets had closed.