Debt-laden Steinhoff International said on Thursday it had raised R4.9 billion by selling 265 million shares, or 7.2%, of discount retail subsidiary Pepkor Holdings.
Steinhoff shares on the JSE dropped 20.45% to an intra-day low of R0.34.
Following the sale via an accelerated book-building process, Steinhoff's interest in Pepkor, the owner of South African clothing brands PEP and Ackermans, will reduce to about 43.8% from 51%.
“Proceeds from the placing will in due course be used to de-leverage Steinhoff's capital structure,” the retail holding company, which also has operations in Europe, the US and Australia, said.
The company added it continued to view Pepkor as a strategic investment for the group.
Pepkor has been doing well recently, with shoppers trading down to cheaper brands as high inflation squeezes spending.
Steinhoff has been looking to reduce its group services debt of €10bn (R190bn) through asset sales and listings following a 2017 accounting scandal that prompted about 90 separate legal claims against it.
Last month Steinhoff, which has a primary listing in Frankfurt, raised €315.2 million from selling a 6.6% stake in its European retail group Pepco.
REUTERS