How Wiese was taken for R200m

BETRAYAL?: THINGS ARE GETTING UGLY IN STELLENBOSCH

It seems Jooste has betrayed his mentor and business partner.

Papers Absa Bank filed before the Western Cape High Court last month, to have ex-Steinhoff International CEO Markus Jooste’s Mayfair Speculators liquidated, show how he removed nearly all the assets from the company before leaving Christo Wiese on the hook for over R200 million.

In December 2016 Mayfair, represented by Jooste’s son-in-law Stefan Potgieter, and Absa concluded a financing arrangement, which saw the bank providing Mayfair with a R335.6 million overdraft facility and bank guarantees of R14.4 million (in total R350 million). To secure this, from Jooste, Absa received a R100 million suretyship and cession of a share portfolio of Steinhoff shares.

Absa also required “an unconditional, irrevocable on demand limited guarantee by Upington Investment Holdings” for R350 million “pursuant to which Upington would guarantee the due and proper performance by the Respondent of all its obligations under the Facility Agreement …” i.e. Upington stood behind any and all obligations of Mayfair up to R350 million.

Upington is a registered company and the primary investment vehicle for Wiese’s Steinhoff shares. Absa took cession of Steinhoff shares from Upington as security.

The Upington Mayfair Absa pledge account held 14.49 million Steinhoff shares at end November worth about R810 million. After Jooste resigned as CEO on December 6, Steinhoff’s share price collapsed from R55 to R17, meaning Mayfair was in breach of its covenants as the outstanding loan balance was barely covered by the shares’ value.

At a December 8 meeting, Absa was told that Jooste had resigned as a director, and the company was insolvent as it had liabilities of R1 billion and assets of about R350 million. This situation, Mayfair representatives told Absa, was largely due to Mayfair Speculators declaring a dividend in specie of R1.5 billion in August to Mayfair Holdings.

The dividend in specie was effectively a transfer of ownership of assets. Jooste deliberately moved the assets out of the reach of creditors. He’d have known Wiese had guaranteed obligations to the tune of R350 million. By December 13, Steinhoff’s share price had sunk to R9.80, meaning the value of the security (R142 million) was now well short of the outstanding R226.3 million. Absa began selling the shares, initially 6.7 million of them, raising proceeds of R70 million. It has since told the broker to sell the remaining shares.

Assuming an average selling price of R10 a share, the proceeds raised should amount to about R150 million. This means Absa is short R80 million plus, which Wiese must stump up for, along with the 14.49 million Steinhoff shares he ceded and has already lost. This, besides the over R60 billion erased from his balance sheet due to the shenanigans and possible fraud Jooste wrought on Steinhoff.

Absa is short R80 million plus, which Wiese must stump up for.