Steinhoff deal looms

Steinhoff International is close to reaching a potential deal on $11 billion (about R187 billion) of legal claims lodged against the global retailer following an accounting scandal that almost wiped out the company, according to two sources.

South African claimants – including former chair Christo Wiese, whose suit amounts to R59 billion – have been offered a combination of cash and shares in Pepkor, one of the sources said.

It isn’t immediately clear how much a settlement could amount to, the sources said, asking not to be identified because talks are continuing and a deal may not be reached.

Steinhoff owns 68% of Pepkor.

“I’m hopeful it will be soon,” Wiese said, without being more specific on the timing of a potential settlement or the offer.

The 78-year-old has the biggest single claim against Steinhoff after becoming its largest shareholder when he sold Pepkor to the firm in 2015.

“I wanted to get around the table and do a settlement as soon as we could, and now it’s dragged on for three years.”

The longer talks take, the more legal fees stack up, Steinhoff chief financial officer Theodore de Klerk said.

He declined to comment on when a settlement could be reached or details of an offer.

Lawsuits replaced debt as Steinhoff’s most pressing concern after the retailer struck a deal with creditors to skip principal and interest payments on its borrowings through next year.

“It’s clear we’re not going to pay, in full, €10 billion (about R212 billion) of legal claims in cash,” De Klerk said. “It’s not right and we can’t do that.”

Steinhoff is pressing hard and is “making progress” in reaching a settlement with claimants such as Wiese and various class-action lawsuits brought by investors and others who lost out when the shares slumped, he said.

That’s as it is trying to mitigate fees it is incurring. It may also use its South African assets to help reduce debt or settle claims, De Klerk said. – Bloomberg