Christo Wiese to sue Steinhoff for R59bn — but Dutch law may not allow it
Veteran businessman Christo Wiese’s Titan Group has instituted a R59bn claim against the Steinhoff group of companies, citing cash investments made between 2015 and 2016.
The Titan Group had served summons on Steinhoff International Holdings, registered in SA, and Steinhoff International Holdings NV, registered in the Netherlands, in respect of claims totaling about R59bn, read a statement released on behalf of Wiese, previously Steinhoff’s chairman, on Thursday afternoon.
“These claims relate to cash investments made by the Titan Group in Steinhoff in 2015 and 2016.”
The 2015 investment related to the Titan Group’s subscription of shares in Steinhoff following the Pepkor acquisition, for which it was claiming repayment. The 2016 investment related to its capital injection into Steinhoff to meet debt obligations relating to its purchase of Mattress Firm in the US.
Wiese said his group was fully prepared to work with other claimants and shareholders to ensure Steinhoff "remains and continues as a sustainable company”. But in conversation with Business Day on Thursday, Wiese would not comment on whether any other shareholders had expressed interest in joining him.
Wiese’s claim against Steinhoff will come as a surprise to shareholders, considering that he has been a director of the company since 2013, and some shareholders may look to hold him personally liable for the company’s accounting fraud. Shareholders were already taken aback earlier this month when it emerged that Steinhoff had loaned Wiese €325m during October and November 2017 for Shoprite shares, just weeks before Steinhoff collapsed.
Armand Kersten, head of European relations at VEB, the Dutch Investor Association, said that Dutch law would prevent Wiese's claim from being upheld, as he was a director of Steinhoff at the time the transactions were entered into. “There is clear case law on this,” Kersten told Business Day.
Wiese was first appointed an independent non-executive director to the Steinhoff International board in March 2013. In November 2015 he was made a director of that board, and appointed chairman in May 2016.
Even if Wiese were to claim he had entered into the transactions under “legal error” (that is, he had been misled in terms of the transaction), as a supervisory director, he would still have a certain liability for any wrongdoing ascribed to the company, Kersten said.
VEB has instituted legal action against Steinhoff on behalf of shareholders, and is also seeking to hold auditors Deloitte, and various banks, liable for shareholder losses.
A restructuring of Steinhoff on “fair and equitable terms” would be in the best interest of all stakeholders, Wiese said. Steinhoff owned “some excellent businesses”, most of which they acquired from Pepkor in 2015.
“In a restructured Steinhoff, these businesses have every potential of continuing to create value for all shareholders and claimants,” said Wiese. “This would require, inter alia, a restructuring of its current debt,” he said. “This prospect is based on the continued excellent performance of the Steinhoff Africa Retail Group (Star), containing most of the original Pepkor businesses, of which Steinhoff is currently the controlling shareholder.
On whether lenders would be prepared to restructure Steinhoff’'s debt, Wiese said he had “no idea”. “Everybody must look at the situation and decide for himself what best outcome for him is.”