Steinhoff sells off its luxury Gulfstream jet to raise funds
● Steinhoff International Holdings, the global retailer fighting to recover from an accounting scandal, sold its luxury Gulfstream 550 private jet to a US aircraft broker as it seeks to boost liquidity.
The luxuriously appointed 2006 Gulfstream has been valued at almost $25-million (about R306-million) and was bought by Steinhoff in April. It is capable of 12-hour nonstop flights and is certified for 16 passengers.
A spokeswoman for Steinhoff confirmed the sale. She declined to comment on the price of the deal, citing a confidentiality clause.
Steinhoff put the plane up for sale shortly after the owner of Mattress Firm in the US and Poundland in the UK announced last month that it had uncovered accounting irregularities that knocked almost 90% off its share price.
The aircraft was advertised for $24.8-million in 2016, and the sale brochure showed the interior fitted out in cream-coloured leather seating, wood panelling and a marble-and-brass bathroom.
The transfer of the aircraft comes at the same time that Steinhoff’s former CEO, Markus Jooste, is trying to sell a sprawling Western Cape residence with vineyards and space for 10 horses for R15-million, 43% more than he paid for it two years ago. — Bloomberg
Transfer of aircraft comes at same time Steinhoff’s former CEO, Markus Jooste, is trying to sell a sprawling residence
I think they need to break with the past, where oversight was lacking
● The resignation of Jayendra Naidoo from Steinhoff’s star-studded board this week may be a sign that calls for new blood are being heard.
But the company’s troubles persist, with the group saying on Thursday that despite measures to stabilise it and support from its lenders, it still requires €200-million (about R3-billion).
Commenting on Naidoo’s departure, Zwelakhe Mnguni, chief investment officer at Benguela Global Fund Managers, said: “I think it is positive. [It] gives more opportunity for independent people to sit on the board.”
Naidoo, who is also the founder of the Lancaster Group, described as Steinhoff’s empowerment partner, resigned on Thursday to focus on his role as chairman of the retailer’s JSE-listed subsidiary, Steinhoff Africa Retail Limited. He will be replaced by a new, independent director.
Mark Hodgson, an analyst at Avior Capital Markets, said he would not read too much into Naidoo’s resignation, with STAR being his priority in the future, but agreed it signalled a move in the right direction for the independent governance of Steinhoff.
“[Naidoo] may be able to claim he is an independent chairman of STAR now that he doesn’t sit on Steinhoff’s board, but prior to that it looked a little bit dicey to try and categorise him as independent,” he said.
Steinhoff’s board — including heavyweights former Absa CEO Steve Booysen, Exxaro Resources nonexecutive chairman Len Konar, and Johan van Zyl, the former CEO of Sanlam, of which he remains a board member — has been criticised for a lack of oversight and independence.
Until this week, Christo Wiese, who briefly took over the reins following the resignation of Markus Jooste as CEO, and his son Jacob were the only Steinhoff board members to resign. Naidoo’s departure suggests the board is in for an overhaul.
“I do think they need to make a break with the past, where the oversight was lacking,” but the best time for that would be when the extent of the accounting irregularities was explained, said Hodgson. While Steinhoff’s board might desperately need fresh talent, the reputational risk associated with the company could hinder it in making such appointments, he said.
Jeremy Sampson, a director at Brand Finance Africa, said a bit of reshuffling at the top might only be the beginning of the fallout likely to engulf the board members.
“Though most of these people are the great and the good and have a lot of other directorships, I would have thought that they are not sleeping well at all at the moment. And I would have thought any other companies that have them as directors are reconsidering whether they still want them as directors,” he said. Other company boards on which Steinhoff board members serve include Sappi and Vukile Property Fund, which said they were monitoring developments at Steinhoff.
It has been suggested that Steinhoff’s problems were largely the doing of its powerful, charismatic former CEO, with Jooste’s resignation being interpreted as an admittance of guilt, and that the board had no knowledge of the accounting irregularities in the company’s allegedly cooked books.
But even if this were the case, only an in-
Mark Hodgson Analyst at Avior Capital Markets
competent board could have allowed such a situation to persist, said retail analyst Chris Gilmour.
“You cannot in this day and age have a board full of stooges that rubber-stamp what a charismatic CEO wants to get away with.”
While resigning from Steinhoff’s board and spilling the beans on the company’s governance problems could be one way for Steinhoff’s directors to save face, such a move would also leave them “unemployable in the corporate sector thereafter”, said Gilmour.
Besides governance concerns, the company has the issue of funding to resolve. In a statement on Thursday, Steinhoff said the first instalment of the €200-million it needed was paid by Friday, while the balance was still to be negotiated. Support for the group’s Central European operation has come from South African lenders.
Steinhoff said operations in South Africa and Australia were financially sound. “A proposed refinancing and redemption of some or all of the group’s” debt in South Africa would release funds to provide liquidity for the rest of the group.
It is also asking its creditors in Europe to provide limited waivers — an extension on capital repayments on its loans. But the company said that although it was confident it would secure these waivers, “there can be no assurance that the company will be able to reach agreement with its finance providers on acceptable terms, or at all”.