Share­hold­ers to sue Stein­hoff for R185bn

Con­sor­tium of law firms ap­plies to high court for what will be SA’s largest le­gal ac­tion to date

Business Day - - FRONT PAGE - War­ren Thomp­son Fi­nan­cial Ser­vices Writer

Stein­hoff, which has had nearly R190bn wiped off its mar­ket val­u­a­tion since De­cem­ber when ac­count­ing ir­reg­u­lar­i­ties came to light, is fac­ing mount­ing le­gal woes with the launch of a clas­s­ac­tion law­suit in Jo­han­nes­burg.

On Wed­nes­day, a con­sor­tium of law firms, act­ing on be­half of Stein­hoff share­hold­ers, ap­plied to the High Court in Jo­han­nes­burg to launch what will be the big­gest class-ac­tion law­suit in SA’s his­tory.

If the ap­pli­ca­tion is suc­cess­ful, in­vestors could be seek­ing dam­ages of more than R185bn, nearly 20 times Stein­hoff’s cur­rent mar­ket cap­i­tal­i­sa­tion.

The suit adds to a num­ber of le­gal ac­tions that have been brought against Stein­hoff and re­lated par­ties in re­cent months.

For­mer chair­man and ma­jor share­holder Christo Wiese is su­ing the group for dam­ages of R59bn, while class-ac­tion suits have also been brought on be­half of share­hold­ers in Ger­many and the Nether­lands.

In June, Dutch share­holder group VEB filed a law­suit against Stein­hoff au­di­tor Deloitte in Rot­ter­dam.

The Jo­han­nes­burg ap­pli­ca­tion names as de­fen­dants the Dutch in­cor­po­rated Stein­hoff In­ter­na­tional Hold­ings NV; its South African pre­de­ces­sor, Stein­hoff In­ter­na­tional Hold­ings; as well as par­ties that as­sisted with its Frank­furt list­ing — these are PSG Cap­i­tal, Absa, Ger­many’s Com­merzbank and UK-based Stan­dard Char­tered Bank, as well as au­di­tors Deloitte and Rödl & Part­ner.

More than 30 cur­rent and for­mer direc­tors of Stein­hoff and its sub­sidiaries have been named as re­spon­dents, in­clud­ing Wiese, for­mer CEO Markus Jooste, for­mer CFO Ben la Grange as well as Stein­hoff’s cur­rent CEO, Danie van der Merwe.

The law­suit brings claims on be­half of all in­vestors who bought Stein­hoff shares in the pe­riod from at least June 26 2013 up to the date Jooste re­signed, on De­cem­ber 5 2017, when the ac­count­ing ir­reg­u­lar­i­ties were first dis­closed.

The 2013 date re­lates to the ini­tial pur­chase of Eu­ro­pean fur­ni­ture re­tailer Kika-Leiner by Ge­n­e­sis In­vest­ment Hold­ing,

a Stein­hoff off-bal­ance sheet en­tity. Stein­hoff, which ini­tially bought Kika-Leiner’s prop­erty as­sets, later ac­quired the re­tail op­er­a­tions too.

The law­suit, which will be the first class-ac­tion suit in SA on be­half of in­vestors, was brought by Jo­han­nes­burg-based law firm LHL At­tor­neys, Dutch firm Bynker­shoek Dis­pute Res­o­lu­tion and Ger­man firm TILP Lit­i­ga­tion.

The suit dwarfs the record class-ac­tion set­tle­ment reached in May when min­ing com­pa­nies agreed to pay R1.4bn in com­pen­sa­tion to mine work­ers who con­tracted sil­i­co­sis and tu­ber­cu­lo­sis on gold mines from 1965.

Zain Lun­dell, a mem­ber of LHL At­tor­neys, said there was a spe­cific rea­son why SA had been cho­sen for the class ac­tion.

“SA has a well-es­tab­lished and re­li­able le­gal sys­tem with favourable leg­is­la­tion that we be­lieve will al­low ag­grieved in­vestors to be fairly com­pen­sated for their losses. More­over, SA’s true opt-out class-ac­tion pro­ce­dure is su­pe­rior to the pro­ceed­ings avail­able in the Nether- lands and Ger­many and, thus, will con­trib­ute to the pro­tec­tion of all share­hold­ers, large and small alike.”

As op­posed to Ger­many and the Nether­lands, which re­quire in­vestors to opt in, all in­vestors in SA are au­to­mat­i­cally a part of the class-ac­tion un­less they choose to opt out.

Lun­dell said the ef­fort to re­cover dam­ages war­ranted the cross-ju­ris­dic­tional ef­fort by the three law firms.

“Stein­hoff was orig­i­nally in­cor­po­rated in SA, then the Nether­lands, and is listed on the Frank­furt Stock Ex­change as well as the JSE.

“So, we are seek­ing to pro­vide a seam­less so­lu­tion to in­vestors re­gard­ing claim­ing dam­ages,” he said.

LHL At­tor­neys was the first law firm to seek dam­ages on be­half of peo­ple who con­tracted lis­te­rio­sis from Tiger Brands’ pro­cessed meat prod­ucts and is now jointly prose­cut­ing the lis­te­rio­sis class-ac­tion suit with Richard Spoor At­tor­neys, who rep­re­sented mine em­ploy­ees in the sil­i­co­sis case.

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