Liquidation bid for Jooste-linked firm

Absa Bank has applied for the liquidation of ex-Steinhoff CEO Markus Jooste’s Mayfair Speculators, which until this week owned SA’s best racehorse, Legal Eagle, hundreds of other racehorses, a property portfolio and Steinhoff shares.

Absa is also demanding an investigation into a suspicious transaction in which Mayfair moved R1.5 billion of assets to its holding company in August, just months before significant financial irregularities became public.

Absa says it’s “highly probable” Jooste was aware of the imminent uncovering of financial irregularities, which he later took responsibility for. This could have prompted the transaction. The liquidation hearing is due today.

Mayfair Speculators

Mayfair Speculators is a wholly-owned subsidiary of Mayfair Holdings. The only active director is Stefan Potgieter, Jooste’s son-in-law. Jooste resigned as a director on December 7. Mayfair houses many of his assets, including Steinhoff shares, many properties, racehorses and a 49% share in Klawervlei Stud.

In an affidavit, Absa’s Hester van Niekerk states that Absa provided a R350 million overdraft facility and bank guarantees to Mayfair last December. This was secured with 11.2 million SBG-held Steinhoff shares. At the time, Steinhoff’s share price was R71 and the shares were worth R800 million. Van Niekerk states that 3.2 million more Steinhoff shares were transferred to SBG on August 18 to increase the total holding to just under 15 million shares, then valued at about R936 million.

Share price implosion

Steinhoff’s share price implosion this month slashed the shares’ value to R145 million, resulting in a breach of the share cover covenants and an Absa representative told Potgieter on December 6 that Mayfair was in breach and requested the company put up additional collateral. Potgieter allegedly stated that Mayfair didn’t have additional collateral to remedy the covenant breaches, according to Van Niekerk.

A few days later, Absa demanded repayment of R226 million.

Subsequently, Potgieter acknowledged to Absa that Mayfair was technically and commercially insolvent as it had liabilities of about R1 billion and assets of about R350 million. Van Niekerk alleges that Potgieter also stated that in August, Mayfair transferred assets valued at R1.5 billion to Mayfair Holdings, as a dividend in specie. This dividend included properties, development properties, Lodestone Brands and a pipe-manufacturing company. He confirmed that Mayfair and other subsidiaries are selling racehorses.

Investigation

In the affidavit, Van Niekerk says Mayfair disposed of R1.5 billion of assets while Jooste was a director. “It seems highly probable Jooste was aware the financial irregularities and fraudulent transactions (at Steinhoff) would be uncovered in the near future, which explains the declaration of a dividend in specie in the sum of about R1.5 billion.”

Van Niekerk said it was imperative a provisional order of winding-up is urgently granted so the provisional liquidator can start an investigation and an inquiry be held to determine the lawfulness of declaring the R1.5 billion dividend .