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UPDATE 1-Steinhoff to place up to 694 mln shares in KAP Industrial

(Corrects headline and first paragraph to 694 million shares not 6.94 million shares)

JOHANNESBURG, March 26 (Reuters) - Troubled South African retailer Steinhoff said on Tuesday it would place up to 694 million shares in KAP Industrial via an accelerated bookbuilding to raise cash to repay debt and shore up its finances.

The placement, which will be offered to institutional investors only, will result in Steinhoff, which has a 26 percent stake in KAP, no longer holding an interest in the diversified industrial group.

Steinhoff in December 2017 admitted accounting irregularities, wiping about 85 percent off its market value and throwing it into a liquidity crisis.

"Steinhoff intends applying the proceeds from the sale of the placing shares to meeting its various obligations, including (but not limited to) those arising from its announced debt restructuring process, and to ensuring its business platforms are appropriately funded," the firm said in a statement.

The company sold down its stake in KAP in March 2018 after placing 450 million shares, or a 17 percent stake, also via an accelerated bookbuild in a bid to plug a liquidity gap.

The firm said the book will open with immediate effect and is expected to close as soon as possible.

Standard Bank and Investec are joint arrangers of the accelerated bookbuild.

Steinhoff, which has more than 40 brands that include Conforama, Mattress Firm and Poundland, has already sold assets that include its Polish unit Kika/Leiner, as well as a stakes in investment holding firm PSG and industrial firm KAP. (Reporting by Tanisha Heiberg; editing by David Evans)