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PSG CEO puts Steinhoff ripple effect into perspective

Dec 15 2017 19:36
Carin Smith

Cape Town - PSG Group does no co-investment business with Steinhoff, nor does it have any joint ventures with Steinhoff, PSG CEO Piet Mouton reiterated to Fin24 on Friday afternoon.

Steinhoff had an equity interest of 25.5% in PSG Group and has a non-executive board representative, but exercised no operational or investment control over PSG Group whatsoever. In addition, PSG Group and Steinhoff do not have any inter-related transactions or ventures,  according to Mouton.

"The negative impact on the PSG share price can largely be explained by the potential PSG share overhang in the market - as Steinhoff had a 25% shareholding in PSG - as well as the negative sentiment attributable to the Steinhoff fallout," Mouton told Fin24.

He explained that this means that Steinhoff announced that it may dispose of non-core assets to improve liquidity. The market has, accordingly, speculated that their interest in companies like PSG and KAP are potentially up for sale.

"This speculation then puts negative pressure on the share price as investors could potentially buy such companies' shares - in this case PSG - at a lower price, as any placement is likely to include a discount of some sort."

He added that, once the potential overhang is removed, then, theoretically, normal trading patterns should resume, barring potential political or market uncertainty.

"I do not believe Steinhoff will necessarily sell any asset at any price, but that is its prerogative and not for me to speculate on,” concluded Mouton.

Fin24 reported earlier that Steinhoff announced on Friday afternoon that it has sold 20.6 million shares in PSG - or about 9.5% of its total share capital - raising approximately R4.7bn. Steinhoff sold the shares at an average of R230 per share.

The sale decreased Steinhoff’s stake in PSG from 25.5% to approximately 16.0%.

PSG shares were trading at R243.41 on the JSE on Friday at 17:00, a decrease of 2.6%, while shares in Steinhoff International were changing hands at R8.03, down 8% on the day.

The share sale came a day after news broke that Steinhoff's board chairperson, interim chief and largest shareholder Christo Wiese stepped down from its supervisory board.

Earlier on Friday, in a note to shareholders, Steinhoff announced that "various banks" had enforced their security rights and sold about 98.4 million shares in the company. These banks had provided funding to an entity ultimately held and controlled by Wiese.

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