Steinhoff International, which lost about R200bn in market value in SA’s worst corporate fraud, has increased its global settlement offer in its latest bid to attract sufficient support to end more than 100 legal claims being waged against it.
The beleaguered global furniture retailer, whose future hangs in the balance, on Wednesday increased its global settlement offer by a further R3.21bn. The settlement was increased to €1.23bn (R21.48bn) in July, up from the initial offer of €943m.
Steinhoff’s share price jumped as much as 29% in intraday trade on Wednesday after the group said the latest offer has the backing of four banking creditors and some claimants, including Hamilton, a litigation-funding company based in Ireland that was representing SA pension funds opposed to the original settlement proposal.
The company’s shares were up 23.21% to R2.07 on Wednesday, the largest one-day gain since January 27.
Steinhoff faces more than 100 legal claims totalling R130bn by shareholders who maintain they were duped into buying a worthless stock through misleading information about the company’s health.
To settle with litigants, Steinhoff proposed an offer that includes 50% Pepkor stock and 50% cash. It argues that meeting all claims will force it into bankruptcy, leaving litigants penniless, so claimants should vote in favour of the settlement offer.
Hamilton, which is seeking more than R14bn on behalf of about 14,000 retail investors, asset managers and pension funds such Allan Gray and Old Mutual in SA, had hauled Steinhoff to court in SA and the Netherlands, but has now expressed support for the settlement offer.
Oscar McLaren, a director of Hamilton, said in a statement: “We believe that the overall Steinhoff settlement is now at a financial level at which we can add our in-principle support. We look forward to continuing to work with Steinhoff towards implementation of the Steinhoff settlement.”
The updated offer and increased local support suggest that Steinhoff is confident that claimants will vote in favour of the settlement. It announced on Wednesday that on September 6 certain claimants will meet to vote on the proposals.
Steinhoff has proposed paying different classes of claimants different amounts, with its former biggest shareholder, Christo Wiese, earning more than ordinary pension fund holders, referred to as market purchase claimants.
Mauritian-based Trevo Capital will challenge this in court on Friday, arguing the settlement proposal is unfair. The Financial Mail reported Trevo saying that the proposal does not treat all like cases alike, but instead favours certain creditors at the expense of others, contrary to justice, equity and commercial morality.
Steinhoff said on Wednesday it had changed Trevo’s claimant status in a bid to make it unable to continue its court action. It remains to be seen whether the unilateral move by Steinhoff will stop the court action with Trevo this week.
Trevo could not be reached for comment.
Steinhoff said ending legal cases and getting more creditors on board will allow it to start the process of finalising the settlement offer.
In the statement on Wednesday, Steinhoff referred to the country’s biggest accounting fraud as “legacy accounting issues”.
Bernard Mostert, who sold his Tekkie Town business in 2016 to Steinhoff for shares that turned out to be almost worthless, is trying to have the company liquidated in a case next month.
“It is regrettable that Steinhoff itself went from describing the events as unlawful, then as accounting irregularities and today as ‘legacy accounting issues’,” Mostert said.
If the firm is liquidated the settlement offer will be derailed.
“We are confident that the liquidation application to be heard in September will be granted and that those who fear to see the inside of a courtroom and hope the fraud will be swept under the rug will be addressed through the liquidation process,” he said.
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