Should be put into con­text. R3b­n­with the im­plo­sion of the com­pany’s share price. But this num­ber

Finweek English Edition - - In Depth Steinhoff - James-Brent Styan boys Stein­hoff en die Stel­len­bosse

im­ploded, these cred­i­tors sud­denly dis­cov­ered that Jooste had tricked them. All that was left of May­fair Spec­u­la­tors by 5 De­cem­ber 2017 was a few small as­sets and mil­lions of Stein­hoff shares, which were worth vir­tu­ally noth­ing.

But what hap­pened to all the as­sets that had ac­cu­mu­lated in May­fair Spec­u­la­tors over the years? When the men­tioned in­sti­tu­tions made loans to May­fair Spec­u­la­tors, there were many as­sets on its books. Among oth­ers, it in­cluded a share port­fo­lio con­sist­ing of Stein­hoff shares, shares in a num­ber of smaller com­pa­nies such as a plas­tics man­u­fac­turer, an in­ter­est in a num­ber of race horses, and a 49% in­ter­est in the Klaw­ervlei stud farm.

But in Au­gust 2017, three months be­fore Stein­hoff’s share price col­lapsed, Jooste and Pot­gi­eter de­clared an enor­mous div­i­dend in specie in May­fair Spec­u­la­tors to May­fair Hold­ings, the hold­ing com­pany. In this case, houses, other prop­erty de­vel­op­ments, in­ter­ests in other busi­nesses and about R200m in cash were is­sued as div­i­dends to May­fair Hold­ings, of which Jooste and Pot­gi­eter were the only di­rec­tors.

The to­tal value of the as­sets is­sued was R1.5bn.

Ac­cord­ing to min­utes of May­fair Hold­ings’ meet­ing in Au­gust, which were seen by this writer, these were is­sued as an “at­tempt at re­struc­tur­ing”. These min­utes were signed by Jooste and Pot­gi­eter.

Af­ter Jooste and Pot­gi­eter stripped May­fair Spec­u­la­tors of most of its as­sets, mainly Stein­hoff shares re­mained in the com­pany and by 5 De­cem­ber 2017 these shares were vir­tu­ally worth­less.

Af­ter the mas­sive as­set strip­ping in Au­gust, May­fair Spec­u­la­tors went on a beg­ging spree to banks at the end of Novem­ber to bor­row even more money. At the end of Novem­ber, Pot­gi­eter asked In­vestec to in­crease May­fair Spec­u­la­tors’ credit fa­cil­ity just days be­fore his fa­ther-in-law re­signed.

In­vestec granted an amount of R93.4m and paid it over to May­fair Spec­u­la­tors at the end of Novem­ber 2017. The se­cu­rity for the ad­di­tional debt was still the Stein­hoff shares.

Absa, In­vestec and San­lam sub­se­quently For­mer chief fi­nan­cial of­fi­cer of Stein­hoff For­mer chair­man of Stein­hoff made an ap­pli­ca­tion to the High Court in Cape Town in De­cem­ber 2017 to have May­fair Spec­u­la­tors liq­ui­dated.

In court doc­u­ments, Absa ac­cused Jooste and Pot­gi­eter of fraud, but did not in­sti­tute crim­i­nal pro­ceed­ings.

“Both Pot­gi­eter and Jooste must have been aware of the fact that the im­plo­sion of the Stein­hoff share price was in­evitable,” Absa stated in its court pa­pers. In an af­fi­datvit, In­vestec’s se­nior le­gal rep­re­sen­ta­tive, Avrom Kren­gel, also said that Jooste and Pot­gi­eter must have been aware of the in­evitable col­lapse of the Stein­hoff share price when they made fur­ther loans at In­vestec.

“They de­lib­er­ately kept the in­for­ma­tion from the bank.”

On 25 April the court was asked to with­draw the liq­ui­da­tion ap­pli­ca­tion af­ter the par­ties set­tled out of court. Absa says in a lawyer’s let­ter sub­mit­ted to court that the cred­i­tors and May­fair com­pa­nies had reached an agree­ment which in­volved, among other things, the or­derly sale of the as­sets of Hold­ings and Spec­u­la­tors to en­sure max­i­mum value for cred­i­tors.

The agree­ment fur­ther­more stip­u­lates that the debt should be paid in full by De­cem­ber 2018.

These is­sues will hope­fully form part of the con­tin­u­ing in­ves­ti­ga­tions be­ing un­der­taken.

PwC’s in-depth foren­sic in­ves­ti­ga­tion, specif­i­cally to re­solve mat­ters, will at best only be com­pleted at the end of the year. The Hawks and other in­ves­ti­ga­tors in Ger­many and the Nether­lands are ap­par­ently still find­ing their way in the dark, wait­ing for the PwC in­ves­ti­ga­tion to be com­pleted.

Mean­while, it’s a re­mark­able achieve­ment that the larger Stein­hoff group re­mains op­er­a­tional with more than 12 000 shops glob­ally, de­spite the enor­mous de­struc­tion of value and lack of fi­nanc­ing caused by the cri­sis.

The Stein­hoff share price is cur­rently trad­ing at about R2.40/share com­pared with R64.40/ share a year ago. ■ ed­i­to­rial@fin­

is the author of

(LAPA pub­lish­ers), which ap­peared ear­lier this year. To win a copy of this book, you can send an email to ed­i­to­rial@fin­ and use STEIN­HOFF as the sub­ject line.

Christo Wiese

Ben la Grange

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