Steinhoff downgraded deeper into junk

Steinhoff International Holdings NV suffered another blow on Thursday when Moody’s Investor Services downgraded the company’s credit rating deeper into junk.

Moody’s cut Steinhoff’s corporate family ratings by three notches from B1 to Caa1, which is seven levels below investment grade and means the company poses a “very high credit risk,” according to the rating company’s definitions.

This is the second multilevel downgrade to hit the furniture and clothing retailer since it disclosed accounting irregularities and the departure of Chief Executive Officer Markus Jooste on Dec. 5.

The ratings provider kept Steinhoff on review for further downgrades, saying the company may face challenges in being able to repay or refinance 1.47 billion euros ($1.75 billion) of debt maturing next year.

“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,” Moody’s said in a statement.

“The situation has been compounded by its operating companies placing an additional liquidity burden on Steinhoff’s centralized treasury function to fund their working capital needs.”

South Africa-based Steinhoff, which owns retailers globally including Mattress Firm in the US, has had to contend with canceled credit lines as the company struggles to shore up the confidence of some of its creditors after reporting accounting irregularities that stretch back to at least 2016. Steinhoff had been rated investment-grade by Moody’s until Dec. 7, when the rating company knocked it down by four notches.

Shares in the owner of Conforama in France and Pep Stores in Africa have plunged about 90 percent this month. The retailer has expanded aggressively around the world with a series of acquisitions, including Poundland in the UK.

Read: The big 5 questions Steinhoff still hasn’t answered about its crisis

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Steinhoff downgraded deeper into junk