June 15, 2018 / 2:31 PM / a month ago

UPDATE 1-Steinhoff Africa Retail plans to change name to Pepkor

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JOHANNESBURG, June 15 (Reuters) - South Africa’s Steinhoff Africa Retail (STAR) plans to change its name to Pepkor Holdings Limited to help distance itself from scandal-hit parent company Steinhoff International

Steinhoff International has been fighting for survival after it discovered accounting irregularities in December which sent shares in both companies tumbling and sparked panic about the credibility of STAR’s own accounts.

STAR, which previously said it was financially independent of Steinhoff, said its Pepkor business contributes the majority of the firm’s revenue and operating profit and is representative of the group.

“The Pepkor brand and its related brands have an incredible legacy and history of success,” said STAR in a statement.

Shares in STAR, which runs Africa’s biggest apparel discount chain Pep, rose 2.5 percent to 17.78 rand by 1427 GMT.

Businessman Christo Wiese, who turned Pepkor into Africa’s biggest clothing retailer, stunned Steinhoff in April with a $5 billion lawsuit that relates to a 2016 capital injection to pay debt and fund the acquisition of the U.S. company Mattress Firm and an acquisition by Steinhoff of Pepkor in 2015.

Wiese was chairman and biggest shareholder in Steinhoff until December last year.

STAR raised 16 billion rand from local financial institutions last month to repay shareholder loans provided by Steinhoff as part of STAR’s listing in September 2017.

Steinhoff, which owns Poundland in Britain, Mattress Firm in the United States and Conforama in France, spun off STAR in August last year to get a higher rating for its developed market businesses and to give investors keen on exposure to Africa a chance to invest in STAR directly.

Steinhoff retains a 71 percent stake in STAR, according to Thomson Reuters Eikon data. (Reporting by Tanisha Heiberg Editing by Tiisetso Motsoeneng/Keith Weir)

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