The share price of Steinhoff African Retail (Star) — soon to be renamed Pepkor — fell nearly 5% to R16.54 on Tuesday, with its confirmation that Braam van Huyssteen and other founders of Tekkie Town were suing it on Monday evening, worsening a general slump in retail shares.
The JSE’s retailers fell after Statistics SA reported a slump nearly five times worse than expected in the country’s first quarter GDP.
The food and drug retailers index fell 2% and the general retailers index fell 3% after the disappointing GDP report.
However, Star’s parent, Steinhoff International, bucked Tuesday’s retail slump, rising 7.5% to R1.15.
Star issued a statement at 5pm on Monday saying that it had received a summons from Tekkie Town’s lawyers.
Steinhoff International informed shareholders on May 10 that the vendors of Tekkie Town were suing it for about €120m. This was in addition to a €110m claim from shareholder GT Ferreira and R59bn claim from former chairman Christo Wiese.
Along with its Sens statement confirming it had received a summons from Tekkie Town’s lawyers, Star issued a media release in which its chairman, Jayendra Naidoo, said Van Huyssteen’s legal battle should be with the retail group’s parent, Steinhoff, and not Star, which was unbundled after the Tekkie Town deal was done.
"While we have empathy with him and all other people in the same position, Star’s legal advisers believe his claims, if any, are only a matter for Steinhoff and Star is not legally subject to any claims as a result of the Steinhoff acquisition of Tekkie Town, which occurred prior to the establishment of Star, and the acquisition by Star of certain assets from Steinhoff, which included Tekkie Town.
"The so-called ‘earn-out’ is not a matter on which Star has entered into any contract whatsoever. Star will defend any claims that are made in respect of Tekkie Town," Naidoo said.
"The only contractual relationship between Star and Mr Van Huyssteen was an employment contract, which he has terminated. The reasons for him terminating his employment contract is a factual matter and should any further processes follow on this point, Mr Van Huyssteen’s version of events will be challenged at the appropriate time. "
In Monday’s media release, Naidoo disputed various reports including that Star had turned to Remgro’s Johann Rupert for potential investment.
"Star has not entered into any negotiations with Remgro or anybody else. Star management have, in the normal course of their functions, been in numerous investor presentations with several investors and potential investors, among others Remgro," Naidoo said.
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