Poundland under pressure as insurer reduces cover

Discount high street retailer Poundland is under growing pressure today as the scandal engulfing its parent company Steinhoff worsens.

London based credit Insurer Atradius, which helps suppliers get paid if a firm goes bust, has reportedly reduced its cover on Poundland stock. This significant move will raise serious concerns amongst their supply base in the run-up to the key Christmas trading period. However, Poundland has insisted that it continues to 'fire on all cylinders' as it prepares to meet creditors and insurers this week in an effort to reassure them.

On December 6th, Steinhoff shares fell over 80% when it delayed its annual financial results and revealed that there was going to be an investigation into its accounts. It then announced that previous financial statements may also need to be restated.

Read - Poundland owners shares collapse due to 'accounting irregularities'.

On the same day that Steinhoff delayed its financial statement, Chief executive Markus Jooste stepped down and last week Chairman and interim CEO Christo Wiese, the 76-year-old retail tycoon who owns 23 per cent of the firm also resigned.

The company is a significant player in the UK retail market. As well as owning Poundland with over 900 stores, it also owns the 150 strong chain Harveys and Bensons for Beds with 270 branches.

The news comes amid reports that Wall Street banks face potential losses of more than £800m on the £1.4 billion loaned to Wiese secured against his shares. Wiese lost more than £2.2billion on paper as the share price fell – stripping him of his billionaire status, with his fortune shrinking to an estimated £552million.

Source: Insight DIY Team

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