South Africa's Steinhoff sells 6 percent of African unit

Troubled South African retailer Steinhoff plans to sell 6 percent of its domestic Steinhoff Africa Retail operation to reduce debt, it said on Wednesday.

Steinhoff, which owns 77 percent of Steinhoff Africa Retail, is fighting for survival after discovering accounting irregularities in December, knocking its share price by about 90 percent and leading to the departure of its chief executive and chairman.

The multinational, which has more than 40 retail brands that include Conforama in France, Poundland in the UK and Mattress Firm in the U.S., said it would sell 200 million shares, or a 6 percent stake, in Steinhoff Africa Retail via an accelerated bookbuild - reducing its holding to 71 percent.

Its present 77 percent stake in Steinhoff Africa is worth 50 billion rand ($4.17 billion)and the deal could bring in about 4 billion rand, bankers said.

“Steinhoff continues to view (Steinhoff Africa Retail) as a strategic investment,” the company said.

Steinhoff Africa Retail was hived off from the group last year to achieve a higher rating for Steinhoff assets in developed markets and give emerging markets focused investors an opportunity to invest in the Africa-exposed business.

Steinhoff plans to use the proceeds to help fund the early repayment of its $1.3 billion South African bond. Last month, the company raised $300 million rand from the sale of a 17 percent stake in KAP Industrial as part of efforts to fund debt repayments.

($1 = 11.9837 rand)