Tag: Steinhoff

By Khulekani Magubane for Fin24 

Steinhoff Africa Retail (STAR) on Tuesday confirmed the resignation of Tekkie Town CEO Bernard Mostert and other senior members of management.

STAR found itself in a tight knot as leadership and staff in its subsidiary Tekkie Town staged a walk-out on Monday.

Fin24 has learned that two senior bosses of Tekkie Town, and as many as 100 staff members, staged a walk-out in the latest development involving an impasse between STAR bosses and Tekkie Town’s founder and former STAR Property Division chair Braam van Huyssteen, who resigned from this position last month.

READ: Steinhoff Africa Retail confirms summons from Tekkie Town founders
Mostert confirmed to Fin24 that he resigned from his position, adding that the higher-ups made his position and the continued growth of the business untenable.

“Myself and the COO have been in partnership in that business for a long time.

“We have reached a point where it has been impossible for us to achieve the desired results for the business in a meaningful way, because of the actions of people at STAR due to the treatment of Mr Van Huyssteen and ourselves,” said Mostert.

STAR, which is in the process of changing its name to Pepkor Holdings, is the JSE-listed company that contains Steinhoff’s African retail assets, including the shoe retailer.

Tekkie Town was bought by Steinhoff International in late 2016. It was later transferred to STAR.

Legal remedies

Mostert said he and his associates would be exploring legal remedies to the impasse with STAR, as even their best efforts to resolve the matter amicably were undermined.

“We worked very hard to find a form of mediation that would allow for Braam to be honoured and to use his unique skills.

“We ultimately saw that because of the personal hatred others had towards him that nothing we would put on the table would be honoured,” Mostert said.

Earlier this month, STAR was issued a summons from Tekkie Town. The summons involved notice of a claim lodged by Van Huyssteen, the founders and original shareholders of Tekkie Town around a disputed earn-out agreement.

Tekkie Town operates 368 stores within STAR’s total retail footprint of more than 5 100 stores, and contributes approximately 3% to STAR’s consolidated annual revenue, according to a statement from the company.

STAR, in a statement on Thursday afternoon, confirmed the resignation of Mostert and certain other senior members of management, with immediate effect.

The retail group said it had deployed an interim management team led by Operational Director at Ackermans Riaan van Rooyen.

“Tekkie Town is an important part of STAR, and further support will be provided to Tekkie Town, as required, through STAR’s extensive operational capability. Tekkie Town will continue operating business as usual,” read the statement.

STAR shares were down 2.48% to trade at R16.94 on the JSE at 15:19.

By Tehillah Niselow for Fin24 

Steinhoff, once referred to as “the Ikea of Africa” and its former CEO Markus Jooste as the African Warren Buffet has seen a spectacular fall from grace since December when it revealed accounting irregularities in its books.

More than 95% of its market capitalisation has been wiped out and the international retailer faces angry investors, from public servant pension funds to Wall Street’s biggest banks.

Four months later, and there’s still no official word on what the accounting irregularities were, the former CEO Markus Jooste is yet to answer burning questions and the share price remains volatile.

The complex and opaque nature of the company, registered in the Netherlands, listed in Frankfurt and Johannesburg and headquartered in Stellenbosch have increased the difficulty in investigations.

Fin24 takes a look at the events of recent months which saw the once giant company, nearly collapse.

24 August 2017

• German media reports that German prosecutors are investigating whether Steinhoff inflated earnings.
• JSE listed shares fell 16% in intra-day trade.
• The company rejects the allegations in the report.

6 December 2017

• Disclosure of “accounting irregularities” and appointment of PricewaterhouseCoopers to investigate the financial statements.
• CEO Markus Jooste resigns, apologising to staff
• Share price dives on JSE by a record 62%, wiping out R117bn in the company’s market capitalisation.

7 December 2017

• Moody’s Investor Services cuts Steinhoff’s credit rating from “lowest investment grade” Baa3 to “highly speculative” B1 as a junk bond.
• Steinhoff’s second largest shareholder, the Public Investment Corporation’s (PIC) 56% stake is worth just R3.6bn. Two weeks prior it was worth R20bn.
• Steinhoff announces new sub-committee to improve governance, all of the 3 appointees are members of the board.

13 December 2017

• Steinhoff announces that the company’s 2016 financial statement can no longer be relied upon and will need to be re-stated.
• The Government Employees’ Pension Fund (GEPF) and its asset manager, the PIC, insist on having 2 representatives on Steinhoff’s board committee investigating the company.

14 December 2017

• Largest Steinhoff shareholder, chairperson and acting CEO Christo Wiese resigns from the board. Continues to insist that he was unaware of the accounting irregularities.

4 January 2018

• Steinhoff chief financial officer (CFO) Ben la Grange resigns.

8 January 2018

• European Central Bank sells entire holding of Steinhoff bonds. The ECB bought into Steinhoff Europe’s €800m bond issue in July 2017, when the bonds carried an investment grade rating. It had to sell due to the central bank’s requirements.

12 January 2018 to 17 January 2018

• JP Morgan, Citigroup, Bank of America and Goldman Sachs reveal losses relating to hundreds of millions of dollars in Steinhoff.

30 January 2018

• Former CEO Markus Jooste declines an invitation from the three parliamentary portfolio committees jointly probing Steinhoff, to appear before MPs saying he’s no longer involved in Steinhoff.
• Acting chairperson Heather Sonn tells MPs that Steinhoff has handed over evidence of fraud to the Hawks, against Jooste.
• Board and Christo Wiese say they are unable to reveal the state of affairs at Steinhoff, until PwC has completed its independent investigation.

12 February 2018

• Steinhoff’s former chairperson Christo Wiese involuntarily sells shares related to his margin loans reducing his shareholding in Steinhoff from 20.52% to 6%.

2 March 2018

• Moneyweb publishes leaked emails which show how former CEO Markus Jooste worked with other executives to move revenue figures around subsidiaries to boost their balance sheets and hide losses.

28 March 2018

• Hawks accuses Steinhoff board of “malicious compliance” with the law in handing over documents related to former CEO Markus Jooste, saying there was nothing contained in them to assist authorities with gathering evidence.
• Parliament’s joint committees probing Steinhoff resolve to subpoena Jooste as he twice declined an invitation to answer questions

5 April 2018

• Following public outrage, Steinhoff directors decide against the proposal to shareholders to reward themselves bonuses for working to restore the company after its collapse.

20 April 2018

• Annual General Meeting, in Amsterdam, Netherlands where the company’s board will for the first time come face to face with shareholders, since the December crash, and face tough questions about their handling of the crisis.

Steinhoff raises R7.1bn from sale of PSG shares

Steinhoff International raised R7.1bn billion of shares in South African financial services firm PSG, the latest in a line of disposals aimed at shoring up the retailer’s battered balance sheet.

The owner of Mattress Firm in the U.S. and Poundland in the UK placed almost 29.5 million shares in Stellenbosch, South Africa-based PSG with institutional investors, Steinhoff said in a statement Monday. That’s on top of the 20.6 million PSG shares sold late last year at the start of an accounting scandal that’s wiped out most of its market value.

“This is positive for Steinhoff as it will secure a decent bit of liquidity out of a fairly well-priced asset,” Alec Abraham, an analyst at Johannesburg-based Sasfin Securities, said by phone. “By selling out of a non-core asset, the company is better able to support its core, furniture businesses.”

The shares rose 3.7% as of 4:41 p.m. in Frankfurt, where Steinhoff moved its primary listing from Johannesburg in December 2015. PSG rose 0.2% by the close in the South African city to R254 rand, about 5.5% higher than the R240 price Steinhoff received for its stock. The retailer holds a 2.5% after the placement.

Steinhoff has been identifying non-core assets to sell while holding talks with lenders about providing financial support. The company said December 5 it had uncovered accounting irregularities and later announced it would have to restate accounts going back to 2015. Chief executive officer Markus Jooste and chairman and biggest shareholder Christo Wiese have both resigned.

The company earlier this year sold a luxury Gulfstream 550 private jet that had once been valued at $25m, while French unit Conforama has disposed of a 17% stake in online retailer Showroomprive for €79 million euros. That’s about half what it paid for the shares in May last year.

The PSG placing was carried out by PSG itself and the South African unit of Standard Bank.

Separately, Amsterdam Court’s Enterprise Chamber delayed a verdict on a case brought against Steinhoff by a former joint-venture partner until no later than February 19. It had been due to make a decision on the case Monday.

By Janice Kew and John Bowker for Bloomberg / Fin24

How Steinhoff affected us normal folk

Most South Africans who invested are poorer today due to Steinhoff’s business collapse and are asking for answers from fund managers.

But‚ many say‚ the business was so complicated‚ with its audited financial statements appearing so reasonable‚ that it was easy for investors to miss red flags pointing to the alleged multi-billion dollar fraud.

Steinhoff’s share price dropped from R46.60 at close of trading on Tuesday to R12.74 a week later. The company has reported a missing R100-billion in the company’s European operations.

Fund Manager Simon Brown said the easiest explanation is to say South African pension holders and investors are R160-billion poorer since the crash. As hundreds of funds would have lost money it is difficult to put an exact figure on the losses.

Many furious South Africans are demanding answers from investors. But multiple fund managers explained that until Tuesday the numbers looked reasonable and “fraud by its nature is subtle”.

The search for answers follows Parliament’s Standing Committee on Public Accounts on Monday calling for the Hawks‚ SARS‚ Reserve Bank and Independent Regulatory Board of Auditors to investigate Steinhoff’s implosion and financial losses.

Not everyone however‚ is buying the investors’ explanations‚ with some Steinhoff critics questioning the company’s executives “loose accounting practices”.

Futuregrowth chief investment officer Andrew Canter said they stopped lending money to Steinhoff roughly eight years ago.

He said they avoided Steinhoff for multiple reasons‚ which included their business’ horrendous complexity‚ involving different brands and companies across different jurisdictions in multiple currencies‚ along with their never-ending acquisitions which rendered year-on-year analysis difficult and credit ratios unreliable.

“If we can’t understand the business‚ why would we lend to it?”

Canter said key to Futuregrowth was being wary of the way Steinhoff’s management conducted business.

He said there were enough signs “which evidently some chose to ignore”.

“From what we know today‚ Steinhoff’s management appears to have been playing fast and loose with the tax laws and accounting practices.”

Investor Karin Richards who has looked back at the Steinhoff cash flow‚ and ratios investors use when scrutinising businesses since the implosion‚ however said: “There is nothing here for me that says ‘oh my … here is a big problem’.”

She said as a former auditor she had a better idea than the average person on how to “window dress accounts”. “But the numbers look reasonable.” She said many funds would have lost their first inflation bases gains in three years. Fund manager Keith McLachlan commented on how people started claiming investors should have spotted the fraud: “Everyone knew it was fraud‚ after the fact.

“Intuitively‚ if one ignores the complexity of the Steinhoff business‚ if it was obviously fraud‚ not only would the stock market have seen it‚ but the auditors would have picked up on it long before it even saw the light of day.

“Nothing in the Steinhoff financial statements really screamed fraud or deep obfuscation of the numbers.

“At best‚ it perhaps looked like a business that was growing a bit too fast. At worst‚ it showed a business whose fundamentals weren’t particularly great. Fraud by its very nature is subtle.”

Wits governance expert Alex van den Heever‚ however‚ said that one needed to question why some investment and equity loan companies saw the red flags‚ but others didn’t.

“That some firms didn’t pull their funds despite other companies’ concerns points to a bit of an ‘old boys club’ operation with people just accepting the word of others in the industry.”

Brown said the financial industry needed introspection.

“Should we not at least as an industry that after looks after people’s pension have some introspection how we got this wrong?

“There are a lot of people saying I can’t see fraud‚ but I can’t see a quality business. Yet‚ we put R400-billion in pension money into this business.”

The R400-billion is when business was R95 a share some time last year.

Financial analyst Stuart Theobald agreed that numbers appeared reasonable but said people trusted Steinhoff main shareholder Cobus Wiese. “Wiese had a certain halo effect. People had committed faith in his abilities to manage complexity and stay on the right side of the law‚ while sometimes going close to the line.”

By Graeme Hosken and Katharine Child for The Sunday Times
Image – The Sunday Times

Shoprite, Steinhoff deal called off

South Africa’s Steinhoff’s and grocery retailer Shoprite have called off a potential deal to create an African retail giant.

In a joint statement, the two firms said “the fact that the relevant parties could not reach an agreement in respect of the Share Exchange resulted in the negotiations being terminated.”

As a result both companies saw a notable increase in their respective stock prices with Steinhoff’s shares in Johannesburg rising more than 7% since the announcement, while Shoprite’s stock jumped more than 6%.

The deal was the idea of retail magnate Christo Wiese, who owns 16% of Shoprite and 23% of Steinhoff, and would have given Steinhoff a major interest in the R110-billion Shoprite.

According to the Global Powers of Retailing list published in Janaury 2017, Steinhoff International, a manufacturer and retailer of mostly furniture and household goods, is currently the biggest retailer in the country and 72nd in the world.

Shoprite Holdings is the second biggest retail brand in the country, ranked 110th.

Source: www.businesstech.co.za

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My Office News Ⓒ 2017 - Designed by A Collective


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