Steinhoff shares surge as it ups settlement offer

Steinhoff International has increased the settlement offer it made to convince litigants to drop claims against it, saying it has achieved a better financial performance recently.

The retailer has increased its offer in exchange for litigants dropping their claims by just more than €200m so that the offer rises to €1.2bn, up from a proposed €943m earlier this year. The settlement includes money and Pepkor shares.

The proposed increase is solely for market purchase claimants, who are ordinary shareholders, and asset managers who represent pension funds that owned Steinhoff shares. They have been offered 66% more than the initial offer.

Steinhoff was worth more than R200bn, but its value plummeted more than R100bn in December 2017 when the accounting fraud was uncovered.

Steinhoff now faces more than 100 legal claims totalling R130bn by shareholders who maintain they were duped into buying worthless stock through misleading and false information about the company’s health.

Steinhoff argues that as the claims will force it into bankruptcy, leaving litigants with nothing, they should vote to take the settlement offer.

Steinhoff CEO Louis du Preez said the financial results of some of its subsidiaries allowed it to adjust its offer.

The SA company, which has a primary listing on the Frankfurt Stock Exchange, is also saddled with enormous debt, which totalled €11bn in its most recent reporting period.

The proposed increased payout comes after Steinhoff lost a case in the high court in Cape Town on July 2 against claimants Trevo Capital, who successfully argued Steinhoff had breached the Companies Act regarding a 2019 transaction in which it provided financial assistance to a related company.

That loss in court could derail the settlement offer. Steinhoff announced on Friday it is applying for leave to appeal the judgment as losing the case means it faces “greater uncertainty and further claims and, in absence of a successful appeal, a long and complicated series of multijurisdictional legal disputes”.

The company continues to face other legal claims that could derail the settlement offer.

Former owners of Tekkie Town, who sold their shoe business in 2016 in exchange for Steinhoff shares, filed a liquidation application in May, with the matter scheduled for a hearing in September.

Steinhoff’s shares on the JSE rose the most in 10 days on Friday, up 12.66% to R1.78.

THE RESULTS OF SOME OF ITS SUBSIDIARIES ALLOWED IT TO ADJUST ITS OFFER

€200m how much more Steinhoff is offering litigants in exchange for them dropping their claims

€1.2bn the revised total settlement figure