Just more than four years after it shocked investors with a disclosure of what would be SA’s biggest corporate fraud, Steinhoff has closed the chapter of litigation that threatened to completely sink what was once Europe’s second-largest furniture retailer.
On Monday, the high court in Cape Town approved a R24bn settlement with investors who lost out after the discovery of “accounting irregularities” in December 2017 contributed to a decline of about R200bn in the company’s value. Steinhoff had faced combined claims of about R180bn, which threatened to push it to bankruptcy.
Judge Rosheni Allie found the final settlement is “fair and equitable” and the approval now makes it binding on all claimants. It had already been signed off in the Netherlands, where the consumer goods company is registered.
Steinhoff’s shares jumped as much as 8.96% to R5.47, before ending 6.2% weaker at R4.71. While they have quadrupled over the past 12 months, they are still down more than 90% over the past five years.
The widely expected court approval will allow the company to focus on efforts to restructure its debt of about €10bn (R172bn), which dwarfs its R21bn market capitalisation on the JSE.
Lenders have agreed to delay the repayment of debt due in December by at least six months if a settlement were reached.
Steinhoff had faced more than 100 legal claims from about 8,500 local and European shareholders who said they were duped into buying a worthless stock. Facing bankruptcy, Steinhoff offered a settlement of €1.42bn, including shares in Pepkor, the retailer in which it holds 50%.
The final SA court approval faced being blocked by a legal fight with the former owners of sports shoe retailer Tekkie Town, Bernard Mostert and Braam van Huyssteen, who sought the liquidation of Steinhoff in one court case and had also filed legal papers actively opposing the court approving the settlement.
The two sold their business and were paid in Steinhoff shares, then valued at R1.8bn. They were rendered worthless after the discovery of the fraud at Steinhoff. Mostert and Van Huyssteen agreed a deal in December, under which they will receive R500m cash and 29.5-million Pepkor shares.
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