![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2018\/03\/Debtpile.png\")
<\/a><\/p>\nThree months on, even creditors who signed a non-disclosure agreement with the company haven\u2019t obtained material information over the nature of the accounting issues, people familiar with the matter said.<\/p>\n
In a 26 January meeting in London, they were told to wait for PricewaterhouseCoopers\u2019 forensic analysis, they said.<\/p>\n
While the company can\u2019t say when the investigation will be over, it will have to come before more than 1 billion euros of loans come due in August, analysts say.<\/p>\n
The problems appeared to be concentrated in the central European business and resulted in an overstatement of assets, revenue, and profit figures, stretching back for years, the company said on 28 February.<\/p>\n
The PwC investigation is digging deeper into off-balance sheet structures and transactions with related parties.<\/p>\n
Even as investigations geared up, investors were pawing over Steinhoff\u2019s damaged securities.<\/p>\n
Bondholders, which included the European Central Bank, took losses of as much as 50% to unload paper in December that just days earlier was trading near face value, according to data compiled by Bloomberg.<\/p>\n
Banks and private debtholders including Commerzbank AG and Natixis SA followed in January, offloading loans at discounts of between 20 and 35%.<\/p>\n
US banks took losses of $1 billion on Steinhoff in the fourth quarter alone, mostly related to Wiese\u2019s margin loans.<\/p>\n
In a report published on 6 December, short-seller Viceroy Research alleged that Steinhoff\u2019s holding company was hiding losses in entities owned by associates of former CEO Markus Jooste.<\/p>\n
Viceroy\u2019s analysis concluded that Steinhoff\u2019s earnings may be at least 1 billion euros lower after adjustments, wiping out most of the company\u2019s expected profits.<\/p>\n
\u201cIt is possible this is just the tip of the iceberg,\u201d Viceroy said in the report.<\/p>\n
Blurred lines<\/strong><\/p>\n The dealings between Steinhoff\u2019s units and non-related parties are often blurred.<\/p>\n Take Alvaglen Estates Limited, a Bahamas-based subsidiary of Steinhoff\u2019s real estate arm, which owns properties in the U.K. At least two of Alvaglen\u2019s assets in the UK are managed by Formal Investments Limited of the British Virgin Islands, according to Land Registry records.<\/p>\n Steinhoff units operate out of warehouses that appeared in Formal\u2019s portfolio, which was available on its website until last week.<\/p>\n Formal\u2019s chairman is Malcolm King, who is also a family friend of Jooste and a director of the company that manages a wine estate in Stellenbosch formerly owned by Wiese, according to South African newspapers and records. Malcolm King didn\u2019t return emails and phone calls through Formal.<\/p>\n Steinhoff said in an email to Bloomberg News that Formal manages certain Alvaglen properties in the U.K. but \u201cto the best of our knowledge, Steinhoff has no other ongoing business relationships with Formal or Malcolm King.\u201d<\/p>\n In at least one case, the complex structure of Steinhoff could play in favor of creditors.<\/p>\n Creditors including Attestor Capital, Centerbridge Partners, Farallon Capital Management, Silver Point Capital, and York Capital Management bought a large portion of 1.6 billion euros of convertible bonds due in 2021 and 2022.<\/p>\n Bond documents show the notes are guaranteed by a predecessor of Steinhoff\u2019s parent company, a unit now called Steinhoff International Holdings Proprietary Limited, SIHPL, which management defined as a \u201cshell company\u201d in a 19 December presentation.<\/p>\n That \u201cshell company\u201d is owed billions by the profitable South African division. The company confirmed in a presentation published on 23 February that SIHPL has a loan claim worth R24.6 billion ($2.1 billion) against the South African part of the Steinhoff group.<\/p>\n The price of 1.1 billion euros of bonds due August 2022 spiked 10 cents on the euro to about 75 cents on the next trading day, according to data compiled by Bloomberg.<\/p>\n Representatives at Silver Point and York declined to comment. Officials at Attestor, Centerbridge, and Farallon didn\u2019t return emails and calls seeking comment.<\/p>\n