Banks give Jooste loan repayment reprieve
Steinhoff International Holdings’ former CEO Markus Jooste has been thrown a lifeline by banks as the global retailer he oversaw for 18 years struggles to survive an accounting scandal that happened on his watch.
Jooste’s personal investment company Mayfair Holdings has been given until the end of 2018 by lenders to sell as much as R2.08bn in assets ranging from real estate to racehorses to repay almost R1.6bn of defaulted loans, according to an agreement between Mayfair and its creditors seen by Bloomberg.
Creditors include two firms tied to Jooste and his son-in-law, Stefan Potgieter, which may realise more than R200m from the disposals, the documents show.
Mayfair will also be able to keep any proceeds left over after creditors are repaid, which
could amount to about R500m. After Steinhoff shares crashed when the company reported a hole in its accounts in December 2017, Mayfair defaulted on the loans and was not able to repay them immediately.
That gave banks including Sanlam capital-markets arm, Investec and Absa, an option to liquidate the company or come up with a break-up proposal to release capital.
The lenders agreed that the latter would realise more value. Mayfair owes the three banks a combined R959m.
Steinhoff has distanced itself from the former CEO, who quit in December 2017, and has referred him to an anticorruption police unit. The owner of Conforama in France and Mattress Firm in the US has also started a probe into its finances that has so far uncovered the inflation of income and asset values over several years.
A scheme of compromise “allowed a standstill until December 2018 to allow the Mayfair entities to sell assets in an orderly manner to benefit all creditors”, Absa said, adding that all creditors backed the plan. Mayfair would not comment and Jooste did not respond to a request for comment.
As well as the R200m owed to companies linked to the former CEO and Potgieter, a further R420m is owed to a company owned by Malcolm King, a property tycoon and a friend of Jooste, the scheme of arrangement shows. Potgieter is the sole director of Mayfair after Jooste quit in December. Neither Potgieter nor King responded to emailed requests for comment.
“We continue to engage with the Steinhoff group of companies with respect to any monies owed by them to Investec,” said Ursula Nobrega, the lender’s head of investor relations.
Sanlam reiterated that the creditors saw an orderly sale process as realising more value than a liquidation.
Jooste and Potgieter were hit with legal claims by Investec and Absa days after Steinhoff reported the accounting wrongdoing on December 5 2017.
The banks contended that loans taken out by Mayfair and backed by Steinhoff stock — including R93m a week before the financial irregularities were reported — were made while Jooste knew of the impending share collapse.
Absa described the dealings as “naked fraud”, in the court papers.