Publications
Partners
Cape Town - The application in which ABSA seeks to recuperate R226m from Mayfair Speculators, the racehorse company of which Markus Jooste was a director until two weeks ago, has been postponed for hearing on the semi-urgent role of the Cape High Court on February 8, 2018.
Earlier on Friday Judge Siraj Desai told the legal representatives of ABSA and Mayfair that he regards the case as having implications far beyond the applicant (ABSA). That is why he preferred to have it postponed for a full hearing on the earliest available date.
Mayfair has until January 10 to file its answering papers and ABSA would then have until January 17 to file its replying papers. It was agreed that costs would stand over to be determined at a later stage.
Jooste was the CEO of Steinhoff International, the global retailer which is near collapse amid an accounting scandal. Since his resignation with immediate effect on December 5, the company's share price dropped more than 90% from R46.25 just before the news broke, to R4.83 on Friday morning.
ABSA approached the Western Cape High Court on December 15 to order a provisional liquidation of Stellenbosch-headquartered Mayfair Speculators.
Company records show that Mayfair Speculators has two active directors, Jooste and Stefanus Potgieter.
READ: Noose tightens around Markus Jooste as banks want money back
In its founding affidavit ABSA said that Mayfair has three types of assets – a share portfolio in Steinhoff International, “certain racehorses” and a minority share in Klawervlei Stud.
The sudden resignation of Jooste, and later of its board chairperson billionaire Christo Wiese, have not yet been able to stop the decline.
Once in the top 10 of the JSE by market cap, Steinhoff is now at around #85.
READ: Steinhoff on brink of dropping off JSE's top 100 company list
Covenant
ABSA said that on December 13, 2016, Mayfair and it entered into a banking agreement. It agreed to provide Mayfair with an overdraft facility of R335m and bank guarantees of R14m.
In return, Mayfair put up a Steinhoff International share portfolio owned by a company called SBG Securities Propriety Limited as surety.
ABSA said the agreement stipulated the multimillion-rand overdraft would remain active as long as Steinhoff shares held their value, and the amount outstanding did not “exceed 50% of the value of the shares”.
An additional provision held that if the amount outstanding exceeded 70% of the value of the shares, ABSA could “enforce any security interest it may have”.
The directors of the company could, however, put up more surety to remedy matters.
Steinhoff share price collapse
ABSA said that by the time Steinhoff's share price had fallen to around R10, Mayfair was in breach of the overdraft facility contract. The bank then asked it to top up its security.
The ABSA affidavit states that Potgieter, one of Mayfair's two directors, then told the bank it “did not have additional revenue to remedy the covenant breaches”.
READ: ABSA wants court to liquidate Jooste company, recover R226 million
Jooste is a known horse racing fanatic and through Mayfair owned one of the largest stables of thoroughbreds in South Africa.
Mayfair sold one of its prize horses, Legal Eagle, this week, Bloomberg reports, quoting Sporting Post.
Adv. Gavin Woodland SC appeared on behalf of ABSA and adv. Brendan Manca SC for Mayfair along with his junior Richard Fitzgerald.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
