Debt-laden Steinhoff share price plummeted almost 10% on Tuesday in early trade on the news it had settled a lawsuit relating to a former business partner of Markus Jooste and European retailer Conforama, which it sold in 2020.
The settlement is worth €202.12m (R3.9bn).
The 2022 annual report shows that €203m had been set aside for this lawsuit, following ongoing negotiations.
The price was down more than 9% in midmorning trade to 29c, before staging a recovery to 32c by midday and closing at 31c.
Steinhoff said it had reached a settlement with the firm LWS on Monday to end all outstanding litigation between the parties. The settlement was concluded before the Commercial Court of Vienna and is subject to the fulfilment of certain conditions, including lender’s consent.
The conflict relates to a long-running battle with Austrian businessperson Andreas Seifert who entered into a business partnership with former Steinhoff CEO Markus Jooste in 2007. The pair bought French furniture company Conforama in 2011 and then Austrian furniture group Kika/Leiner in 2013.
In 2014, Seifert and Jooste fell out and the partnership ended.
In 2019, it emerged a firm linked to Seifert called LWS said it was a creditor of Steinhoff Europe and was owed about R4.9bn. It challenged a restructuring of Steinhoff Europe's debt in the Austrian courts. The settlement concluded on Monday was with LWS.
Steinhoff's share price has been very volatile. It closed 64% lower on December 15, moving from R1.63 to 58c when the retail holding company announced it had reached agreement with a consortium of lenders, about then taking ownership of 80%-100% of the firm and delisting.
The company’s €10bn debt exceeds its assets and most debt is due in June.
The Steinhoff share price has been losing value with some analysts suggesting it could go to zero
The share again plummeted when Steinhoff announced this month that it would sell a portion of its 51% stake in SA retailer Pepkor. It moved from holding a majority stake of Pepkor to 43.8% and made R4.9bn from the sale of 265-million shares.
In 2022, Steinhoff settled with more than 8,000 claimants, who had filed claims worth R184bn in relation to being misled by the firm and buying worthless stock. It paid out R24bn in cash and Pepkor shares.
Update: February 21 2023
The share price movement has been updated in this story.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.