Steinhoff Africa forges own path
WANTS TO BE INDEPENDENT OF PARENT COMPANY Steinhoff Africa Retail director says company wasted no time putting as much distance as possible between themselves and parent.
For a start they’re considering changing Steinhoff’s name. “There is a proposal out, but we have made no decisions yet,” CEO Leon Lourens said at the group’s AGM on Thursday.
Other measures include adjusting the board composition to reduce the Steinhoff influence, securing independent financing and settling debt owed to Steinhoff.
This follows the December implosion of Steinhoff, Star’s majority shareholder, following news of accounting irregularities and CEO Markus Jooste’s subsequent resignation.
The companies were intimately entwined, despite Steinhoff having unbundled Star from its operations and listing it on the JSE, Lourens said.
“We are making strenuous efforts to create independence and put some distance between the group and Steinhoff NV,” said chair Jayendra Naidoo.
The first step was to announce the departure of CEO Ben La Grange, who was once Steinhoff’s CFO. Next was to dilute the Steinhoff influence at board level.
“At listing [last September] six of our 11 directors were also Steinhoff NV directors. Star was very much the offspring.
“Today three directors of Star are directors of Steinhoff and shortly there will be a bigger percentage of non-Steinhoff independent directors.
“There are processes underway to assess the qualifications, skills and experience of existing board members, and to recruit new independent non-executive board members.
Crucially, within a matter of weeks, Star will be financially independent of its parent.
“We are two to three weeks away from fund flow,” CFO Riaan Hanekom said.
“We have applied for R18 billion in funding and have final irrevocable offers from the banks – in fact the offer was oversubscribed.
The funds will be used to pay Steinhoff’s shareholder-loan funding of R16 million – well ahead of the due dates – and provide Star with standalone financing facilities.”
Once this process is complete Star’s executives believe that the company will have extracted itself from all financial obligations its parent (and 77% shareholder) could place on it.
The directors are also confident that “no bugs will be found in the mattress,” as one pension fund manager put it.
“Our results [for the year to September 2017] were audited by two sets of auditors: PWC, which audits Pepkor and Deloitte which audits Steinhoff and Star Corporation,” said Johann Cilliers, chair of the audit committee.
“Steinhoff and the African business were run very separately, with different management teams. There is no reason to believe there will be any spillover [from Steinhoff].”
Lourens pointed out that the financial results have been reviewed by auditors twice since they were published.
“We are also still waiting for the PWC forensic results.”
“We are a retail company with fantastic brands (Pep and Ackermans). Now we need to show the market that we are a retail company that can be trusted,” Lourens said.