Steinhoff: the saga continues
Shoprite deal was aborted but ¤200m was not paid back
● Billionaire Christo Wiese still owes embattled Steinhoff International some of the more than R5bn he received shortly before the company crashed in December 2017, its long-awaited 2017 financial results show.
But as Wiese is suing the company for R59bn, he is holding on to it for now.
“We are in litigation and I doubt you’ll get much comment from me or them about the matter at the moment,” he told Business Times this week.
It has been more than 17 months since the meltdown in Steinhoff shares after the postponement of the company’s results due to “accounting irregularities” and the resignation of former CEO Markus Jooste. Wiese was the company’s chair and largest investor at the time.
Steinhoff has been selling assets, herding creditors into lock-up agreements and cutting costs to stay afloat in the wake of the accounting scandal that has forced the company to revise the assets on its books downwards by R290bn.
The collapse wiped out a sizable chunk of Wiese’s fortune, but it also derailed a transaction that would have swallowed billions of rands more.
Wiese and Steinhoff were on the cusp of pushing through a deal that would have given the retailer control of Shoprite. Negotiations were so far advanced that Steinhoff pre-paid entities under Wiese’s control for some of the shares they held in Shoprite.
“In the process, Steinhoff made prepayments of à125m [about R2bn] and à200m in October and November 2017 to entities related to Wiese,” Steinhoff said in its 2017 annual report released this week.
And the money has not all been paid back.
“Agreements have been entered into during February 2018 in terms of which à125m has been settled,” the company said.
But that leaves a sizable debt outstanding. à200m plus interest is expected to be repaid on agreed terms,” the company said.
Wiese sold down several of his holdings last year to lower his debt. He disposed of his stake in Aspen Pharmacare early last year, the drugmaker’s CEO, Stephen Saad, said at the time.
He also cut his stake in Shoprite in several tranches notably a R3.6bn share sale in June last year. The retailer announced earlier this year plans for a transaction that would see Wiese receiving shares in Shoprite worth more than R3bn as payment for cancelling the high-voting shares that had kept him in control for decades.
The Steinhoff results reveals that the prepayment to Wiese’s entities came at a time when the group could not really afford it — its current liabilities exceeded current assets.
“The entities are awaiting regulatory approvals to be able to perform under the terms of the agreement,” Steinhoff said.
Besides the prepayments, Steinhoff also revealed that Wiese earned nearly à500,000 for providing “management services” through a private company in 2017. That was on top of his director’s fees of à300,000 that year and à900,000 more for other services by companies related to him, such as making a private aircraft available to Steinhoff bosses for business travel.