Steinhoff International's share price continued to take heavy knocks on Wednesday, with the threat of investigations by regulatory bodies in South Africa, Europe and the U.S., Business Day reported on Thursday.
Late on Tuesday evening, news broke that Steinhoff chief executive Markus Jooste had resigned, following months of denials that Steinhoff was allegedly committing fraud in its accounting.
"The supervisory board of Steinhoff wishes to advise shareholders that new information has come to light today, which relates to accounting irregularities requiring further investigation.
"The supervisory board, in consultation with the statutory auditors of the company, has approached PwC to perform an independent investigation."
A German magazine revealed in August that Jooste and three other employees were under investigation for possible accounting fraud.
Jooste admitted in a letter to his colleagues that he had made "some big mistakes", Fin24 reported.
Steinhoff chair, billionaire Christo Wiese, stepped down in the wake of Jooste's resignation.
According to Business Day, Wiese lost R44-billion on his Steinhoff shares on Wednesday.
The company's share price had recovered slightly by the close of business on Wednesday, but analysts told Business Day that it was impossible to tell what the business' current true value was.
An analyst reportedly said: "Nobody knows the extent of the fraud, the extent of the revisions that will be needed or the extent of the fines that are on the cards from any of a number of jurisdictions. It [the share price] could be anything from R25 to minus R2. At the very least you have to deduct goodwill and intangible values, and then there are the debt covenants to consider."
Fair Tree Capital's Jean Pierre Verster told Business Day that Steinhoff's problems were obvious from public documents.
One report shows how two off-balance sheet entities, Campion Capital and Southern View Finance, were used to artificially inflate Steinhoff's earnings, Business Day reported.
According to Fin24, Jooste said in his letter: "Now I have caused the company further damage by not being able to finalise the year end audited numbers and I made some big mistakes and have now caused financial loss to many innocent people. It is time for me to move on and take the consequences of my behaviour like a man. Sorry that I have disappointed all of you and I never meant to cause any of you any harm."
In the wake of the German allegations, Jooste had been confident that he could shake off any potential harm to the group, Moneyweb reported. But a report by Viceroy Research shows the extent of the alleged fraud.
The explosive report was released on Wednesday, showing what analysts reportedly called the shocking and unusual rate of acquisition for a firm such as Steinhoff.