Steinhoff ’s shock move

PAYOUT: WIESE-RELATED ENTITIES GET R7BN PRIOR TO COURT OUTCOME

Conservatorium likely to challenge payment

Conservatorium expected to launch legal proceedings in bid to reverse decision.

Steinhoff appears to have done an aboutturn on its undertaking not to pay out on Christo Wiese-related claims until legal battles with US-registered Conservatorium disputing those claims have been settled.

According to a just-released update of its $1 billion settlement proposal, Steinhoff has now undertaken to pay out on the substantial part of Wiese’s claim against Steinhoff.

This means about R7 billion will be paid to Wiese-related entities as soon as the proposed settlement is finalised rather than waiting for the outcome of the legal battle between Wiese-related entities and Conservatorium.

The change of heart by Steinhoff is likely to result in a several month delay in the finalisation of the proposed settlement. Conservatorium is expected to launch legal proceedings against Steinhoff in a bid to reverse the payment decision.

US-registered Conservatorium is the legal successor to a group of financial institutions that had extended a €1.6 billion loan to Wiese in 2016. As security for that loan, which was used to buy Steinhoff shares, Wiese pledged those Steinhoff shares and other Steinhoff shares that he had acquired in 2014 in exchange for his Pepkor shares.

Wiese’s R59 billion claim comprises the R34.7 billion worth of Pepkor shares he gave to Steinhoff in exchange for Steinhoff shares back in 2014. That is referred to as the Upington 2 claim in Steinhoff ’s proposed settlement. In addition, Wiese’s claim against Steinhoff includes R24.3 billion for the 314 million Steinhoff shares he bought in 2016 with the €1.6 billion loan.

Conservatorium contends it is entitled to the bulk of any payment made to Wiese because he pledged most of his Steinhoff shares when he took out the €1.6 billion loan in 2016. Conservatorium has initiated legal action in South Africa and the Netherlands to secure its claim against the Wiese entities.

On Friday, Steinhoff released an updated version of the proposed settlement, with one critical change. Steinhoff is now intending to pay Wiese-related entities about R7 billion for the “Upington 2 claim” without waiting for the outcome of the court battle.