Steinhoff has reached agreements with the two last parties that were standing in opposition to its settlement offer, which will end all litigation against it.
This paves the way for the controversy-mired consumer goods conglomerate to leave behind more than two years of legal wrangling and R184bn in claims.
Steinhoff’s share price closed 22.5% higher at R3.15 on Wednesday on the news that the former owners of Tekkie Town, Bernard Mostert and Braam van Huyssteen, will receive R500m cash and 29.5-million Pepkor shares, which they must hold for at least 180 days, in a deal worth more than R1.1bn. Steinhoff owns more than 50% of Pepkor.
Trevo, which is linked to former Pepkor CEO Pieter Erasmus, has been granted options to buy 120-million Pepkor shares exercisable in three years at R24.9215 per share.
The settlement also allows Erasmus to negotiate a role on the Pepkor board. Pepkor made changes to its board on Thursday, but Erasmus has not yet been offered a position publicly.
The two settlements could mean Steinhoff has finally reached the end of its two-year battle to put the legal claims — which posed a threat to its survival — behind it and allow it to focus on restructuring its mountain of debt and on its operational performance.
Steinhoff, which almost collapsed in SA’s biggest accounting fraud, faced more than 100 legal claims from more than 8,500 local and European shareholders totalling more than R180bn. They said they were duped into buying a worthless stock. The company’s value plunged by about R200bn after the fraud was exposed in December 2017.
Facing bankruptcy from the volume of claims, Steinhoff offered a settlement of €1.42bn (about R24bn) including Pepkor shares in August, which it had to increase twice to garner sufficient support. The final settlement was supported by all claimants in the Netherlands and was passed in three votes by three sets of creditors in SA earlier this year.
However, Trevo and the former Tekkie Town owners filed papers opposing the settlement, which is now set for an approval hearing in SA courts in January 2022.
Mostert and Van Huyssteen sold their shoe business to Steinhoff in 2017 for shares worth R1.8bn, but the shares lost most of their value months later when SA’s biggest corporate scandal was revealed.
The duo were trying to derail the settlement and liquidate the company in a separate case and had multiple cases against Pepkor, which owns Tekkie Town.
Mostert had vowed to fight to block the Steinhoff global settlement, saying it would result in tens of billions of rand being sent offshore to foreign claimants when he believed the money should remain in SA.
Mostert said that none of the top leadership involved in the Steinhoff fraud has faced prosecution or jail time and “justice” needs to be done. He told Business Day previously: “You can’t cram all legal claims down [with the settlement] and not lift the lid on what happens.”
Mostert appears to have had a change of heart after scoring a settlement that is more generous than any of the claimants, such as the pension funds invested in Steinhoff, will receive.
Change of heart
He is receiving about 61% of his main Steinhoff claim, excluding interest, a much higher ratio than the defrauded pension funds and retail tycoon Christo Wiese. Once Steinhoff’s largest shareholder, Wiese had a claim of R43bn against the retailer. He was set to get 18.3% of what he was owed in August, though the deal was improved slightly.
Mostert said in a statement that the reason for ending multiple legal claims against Steinhoff and Pepkor is that he and Van Huyssteen want to focus on their new business, Mr Tekkie, which is enjoying “great momentum”.
Steinhoff has slowly settled with many litigants who opposed its settlement in court processes.
In September, it went so far as to launch an urgent Sunday court case against Wiese to force him to vote in favour of the settlement. It also increased his R7.9bn settlement with a debt deal worth about R2.2bn.
In September, Steinhoff also settled with Hamilton, an Irish firm that sponsors legal cases and represented SA fund managers Allan Gray, Old Mutual and Sanlam. It promised to pay Hamilton’s legal costs of €500,000.
Under pressure
The retailer was under pressure to finalise a settlement before the SA Reserve Bank’s permission to send assets offshore expires. Steinhoff debt that was at €10bn earlier this year is maturing in December 2022, but European lenders have agreed to extend the repayment date by six months to a year on condition a settlement with all litigants is reached.
Steinhoff owns some profitable assets, including the US-based Mattress Firm. It is the majority owner of listed European discount retailer Pepco and has a majority stake in Pepkor, the owner of Pep, Ackermans and Incredible Connection.
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