Court rules against Lodestone sale interdict
Days after controversial businessperson Markus Jooste claimed that he had nothing to do with Steinhoff’s accounting scandal, the former CEO of the beleaguered retailer was handed a victory by the high court in Johannesburg on Friday.
The court ruled that his Mayfair Holdings investment company could sell its Lodestone Brands business using a mechanism that will force Lodestone’s minority shareholders to also offload their shares. Lodestone’s brands include Rascals sweets and the Fusion range of dairy blend concentrates.
The ruling will help Mayfair to repay loans backed by now-collapsed Steinhoff shares.
Friday’s ruling therefore means the founders will be forced sellers. The court dismissed their application for an interdict with costs.
The founders of Lodestone’s three underlying firms, who are also its minority shareholders, went to court in a bid to stop Mayfair and Standard Bank, the appointed investment bank, from going ahead with the sale.
The applicants, who own about 22% of Lodestone, argued that Mayfair should either sell its shares without forcing them to do the same or should sell its stake to them at fair value.
Mayfair could also let them see the bids of interested parties so that they could match the bids and buy out Mayfair’s shares, they argued.
Friday’s ruling therefore means the founders will be forced sellers, unless the court deems Lodestone's memorandum of incorporation to be unfair. The court dismissed their application for an interdict with costs.
In its argument, Mayfair said it probably would not have had time to sell its consumer goods unit by December as laid down by creditors, if the high court interdicted the process.
Leonard Harris, senior counsel for the respondents, told the court in June that since Lodestone’s memorandum of incorporation included a clause that allowed for the majority shareholder to launch a competitive sale process that roped in minorities, there was therefore no unfair conduct.
The founders told Business Day they were not yet sure whether the ruling could be appealed against.
But Lodestone's legal team said: "The dispute is still pending — it is only in relation to the urgent relief sought (i.e. part A — the urgent interdict to stop the competitive sale process) that the court has ruled against the applicants, and that ruling may be appealed against (i.e. it is not finalised).
"The court has not given its written judgment, so the applicants have not had the opportunity to study the reasons for the judgment and to make a decision as to whether to appeal or not. If they decide to appeal, the lodging of such an appeal would suspend the outcome/effect of the urgent application," it said.
"The relief sought in terms of part B has not been heard or ruled upon by the court (i.e. not finalised). Part B deals with whether Lodestone's memorandum of incorporation is unfair when it says the directors can launch a competitive sale process."
Supplementary court documents show that 24 parties had expressed an interest in buying Lodestone, including Tiger Brands, Remgro, Long4Life, Premier Foods, Pioneer Foods and RCL Foods.
Jooste said in parliament on Wednesday that he had nothing to do with the fraud at Steinhoff.
He said he resigned on December 5 2017 because the group’s board did not accept his proposal that it immediately terminate the services of Deloitte as auditor, appoint a new set of auditors, and publish unaudited financial statements on the scheduled date.
Correction: September 10 2018
Explanatory paragraphs detailing Lodestar's legal position were included in an updated version of this article.