Life became even tougher for Christo Wiese at the weekend when it emerged that the forced sale of 98.5-million of his Steinhoff shares is likely to be reviewed by the Financial Services Board (FSB) to determine if it contravenes insider-trading regulations.
On Sunday, JSE CEO Nicky Newton-King said sales by outsiders, such as banks, to cover a loan liability would not usually be a contravention, "unless they were shown to be in possession of inside information when they forced the sale".
Newton-King said the FSB, which regulates insider trading, would need to consider all the relevant facts.
"I understand people being unhappy, but liability will be determined by the facts and it might take time to uncover all the facts."
An investigation by the FSB is likely to be one of the lesser challenges facing Wiese and other Steinhoff directors as anger mounts over the multibillion-rand share collapse.
The forced sale of the Steinhoff shares ensured that the Shoprite leg of the Steinhoff Africa Retail (Star) transaction would not go ahead.
The share sale meant that
the stake held by the Wiese-linked consortium fell below
the 30% level needed for
control in terms of the Frankfurt listings requirements.
Without control of both Steinhoff and Shoprite, Wiese’s plan to sell his controlling stake of Shoprite into Star would have required an offer to Shoprite minority shareholders.
Ahead of last week’s forced sale of Steinhoff shares, the Wiese-linked consortium could claim there was no change of control for Shoprite shareholders. While an offer to Shoprite minority shareholders based on Steinhoff shares was unlikely to be accepted, the need to make one was certain to be a deal killer.
For Wiese, the collapse of the plan to create an African retail champion means he also loses out on the R3bn cash he was set to pick up from the sale of his Shoprite voting rights (deferred shares) to Star.
The failure to implement the Shoprite leg of the transaction means that months of detailed planning by Wiese and his advisers have come to nothing. The plan included the controversial repurchase of 8.7-million Shoprite shares from former CEO Whitey Basson.
The purchase and cancellation of these shares ensured Wiese’s control pool had just more than 50% of Shoprite.
It pushed Wiese’s position from negative control to outright control of Shoprite.
Shareholder activist Theo Botha, who was outspokenly critical of the repurchase of the Basson shares, said some of the recent trading in Steinhoff shares was being done by people with insider information.
He called for the JSE to investigate the issue.
Meanwhile, analysts are querying why Star appointed FirstRand Bank to facilitate the refinancing of a R16bn shareholder loan provided by Steinhoff. "It is understandable that Steinhoff would want that repayment, but it is difficult to see what obligation Star has to repay it," said one analyst, who did not want to be named.
He said the Star board was obliged to make decisions in the interests of all shareholders and not just Steinhoff.
Unless the terms of the loan oblige repayment on demand or unless FirstRand can secure more favourable loan terms,
the board risks legal action against it by non-Steinhoff shareholders.
A speedy repayment to Steinhoff’s Dutch head office also assumes that the South African Reserve Bank will be accommodating in granting exchange-control approval.
The controversial Viceroy research report may have raised enough questions around the externalisation of Steinhoff to ensure the necessary exchange control approval will be a drawn-out process.
On Friday, a Steinhoff representative confirmed that Wiese had stepped down from all Steinhoff boards.