Steinhoff closer to settling R25bn claims after greenlight by claimants
PIC supports the global settlement – but Tekkie Town court action threatens the multinational’s future earnings
SCANDAL-ridden retailer Steinhoff International Holdings NV (SIHNV) is a step closer to regaining stability after “contractual claimants” including former chairperson Christo Wiese, on Friday, voted in favour of the company’s R25 billion settlement.
Steinoff, whose retail businesses include Pepkor Holdings, Mattress Firm and Greenlit Brands Group, closed 5.26 percent stronger on the JSE after the embattled multinational told the market it received overwhelming support at the third creditor’s class meeting, on Friday.
The approval paves the way for the settlement of R136bn in legal claims and the chance to move ahead and address the remaining challenges, such as debt.
Closing the chapter on litigation claims will enable Steinhoff, the majority owner of Pepkor in Africa and Pepco in Europe, to focus attention on its mountain of debt, which exceeds €9 billion (R151bn) and continue its recovery, since the fraud scandal in 2017.
“The meeting of the Steinhoff International Holdings Proprietary (SIHPL) Contractual Claimants to vote on the S155 proposal resumed today at 2pm and it obtained overwhelming sufficient support to pass the applicable statutory thresholds for approval from the SIHPL Contractual Claimants,” said Steinhoff on Friday.
Steinhoff, whose accounting irregularities in 2017 led to the collapse of the share price by more than 90 percent and a loss of more than R200bn in its market capitalisation, said the two creditors’ class meetings held earlier last week also endorsed the proposed settlement. The vote means most of the claimants in South Africa and the Netherlands have approved the process.
The next step will see the group applying to the Cape High Court for an order approving the proposal.
Steinhoff said a Dutch court was on Thursday expected to consider the outcome of the voting of Netherlands claimants.
However, Steinhoff is not out of the woods after the Western Cape High Court, last week, said a liquidation bid by founders of shoe retailer Tekkie Town can go ahead. Former Tekkie Town owners and management will ask the court to liquidate Steinhoff NV and its subsidiary Pepkor after they were “duped” to accept restricted Steinhoff shares in exchange for a controlling interest in Tekkie Town.
Tekkie Town, which was founded by Braam van Huyssteen, will also argue that when Steinhoff collapsed following the accounting irregularities, its share price crashed and the script which the Tekkie Town vendors had received for their company and its business became commercially worthless.
Last week, the Public Investment Corporation (PIC) - which manages more than R1 trillion in assets on behalf of state pension funds, said it had entered into a settlement agreement to support the implementation of the Steinhoff global settlement.
“The PIC believes the proposed settlement is in the best interests of its clients, given the alternative cost of protracted litigation and related uncertainties, and the prospect of further diminishing share value.
“It attempts to provide certainty and will allow Steinhoff the opportunity to recover as a company, to continue trading as a going concern and to avoid further job losses,” said the PIC.
It also said details of the proposed settlement agreement could only be disclosed once due legal process had been concluded. The PIC said in 2018 it joined a group of approximately 40 institutional investors who brought damages claims against SIHNV before the Dutch court.