Shareholders in South Africa’s most notorious company face a grim scenario
22 December 2022 - 05:00
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Former Steinhoff CEO Markus Jooste. Picture: ESA ALEXANDER/SUNDAY TIMES
It’s been five years in coming, but it seems South Africa’s most notorious company, Steinhoff, may have reached its sell-by date.
Last week, Steinhoff announced that shareholders will have to vote on a plan to hand over 80% of the company to creditors in exchange for deferring the repayment of debt from 2023 to 2026.
It means shareholders will retain just 20% of the company — but that’s actually the best-case scenario: if they veto the plan, the financiers will take over the entire company.
It’s a case of Hobson’s choice for shareholders, who have seen the value of R100,000 invested on December 1 2017 dwindle to R1,013 today. But after an earth-shattering fraud of R106bn, few would have expected Steinhoff to still be going.
That it has survived is due to its strong assets — including 51% in Pepkor (worth R37bn) and 78% of Pepco (worth an estimated R67bn). The problem is, they’re not chalking up profits fast enough to dent Steinhoff’s €10bn debt.
Some shareholders will grumble that Steinhoff surely had other options. But for those who hung on, it’s a grim denouement.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
EDITORIAL: Facing a grim finale
Shareholders in South Africa’s most notorious company face a grim scenario
It’s been five years in coming, but it seems South Africa’s most notorious company, Steinhoff, may have reached its sell-by date.
Last week, Steinhoff announced that shareholders will have to vote on a plan to hand over 80% of the company to creditors in exchange for deferring the repayment of debt from 2023 to 2026.
It means shareholders will retain just 20% of the company — but that’s actually the best-case scenario: if they veto the plan, the financiers will take over the entire company.
It’s a case of Hobson’s choice for shareholders, who have seen the value of R100,000 invested on December 1 2017 dwindle to R1,013 today. But after an earth-shattering fraud of R106bn, few would have expected Steinhoff to still be going.
That it has survived is due to its strong assets — including 51% in Pepkor (worth R37bn) and 78% of Pepco (worth an estimated R67bn). The problem is, they’re not chalking up profits fast enough to dent Steinhoff’s €10bn debt.
Some shareholders will grumble that Steinhoff surely had other options. But for those who hung on, it’s a grim denouement.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.