Steinhoff: Banks enforced security rights
ANALYSTS have described billionaire Christo Wiese’s reduced shareholding in Steinhoff as a sign that banks and lenders were enforcing their security rights by selling shares and not an indication that the former chairperson had lost confidence in the troubled retailer.
Neil Brown, a co-fund manager and equity analyst at Electus Fund Managers, said that the JSE stock exchange news service (Sens) reported in December already that Wiese had resigned as chairperson and member of Steinhoff’s supervisory board a day after he sold 98 million Steinhoff shares, which was just more than 2 percent of Steinhoff, presumably reducing his stake in Steinhoff from 21 percent down to 19 percent.
“The reason for the above sale of Steinhoff shares was given as involuntary sale of shares by funders under security arrangements,” Brown said. “This means that there was debt attached to many of the Steinhoff shares that Christo Wiese owned.”
The Netherlands’ Authority for Financial Markets website last week reported that Wiese had significantly reduced his stake in Steinhoff from 21 percent to 6.2 percent.
The banks that had provided funding to an entity ultimately held and controlled by former Steinhoff chairperson Christo Wiese enforced their security rights and sold the shares.
The Public Investment Corporation (PIC), which holds around 7.5 percent stake in Steinhoff, was surprised by Wiese’s reduced shareholding. PIC was the second largest shareholder behind Wiese. Brown said as Wiese was no longer on the supervisory board, he no longer had to disclose his share sales.
He said Wiese sounded positive about the business of Steinhoff, despite the group dropping by more than 85 percent in share price with a market capitalisation also reducing by almost R200 billion.
“Wiese suggested on January 31, 2018, to the Parliamentary Committee that there was probably still value in Steinhoff shares. Based on the above comment in Parliament, it would seem likely that his further sales since December of Steinhoff shares, down to 6 percent, have been for the same reason that he sold shares in December 2017, being that the banks forced the sale of his shares,” Brown explained.
Steinhoff supervisory board said it would publish its quarter update at the end of February as it was yet to publish its annual results.
Steinhoff shares declined 6.57 percent on the JSE yesterday to close at R5.55.