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Foreign banks enforce security rights on 98m of Wiese's Steinhoff shares

Dec 15 2017 15:41
Carin Smith and Jan Cronje

Cape Town - Steinhoff International [JSE:SNH] said in a note to shareholders on Friday that "various banks" had enforced their security rights and sold about 98.4 million shares in the company.

These banks provided funding to an entity ultimately held and controlled by former Steinhoff chair Christo Wiese.

The billionaire, who is also the largest shareholder in Steinhoff, stepped down from his role as interim Steinhoff chief and chair of the Stellenbosch-headquartered retailer's supervisory board due to the accounting scandal gripping the retail giant. 

The scandal has already led to the resignation of former CEO Markus Jooste.

In a second note to shareholders, also referring to this sale of shares, Steinhoff said Wiese was involved in "the involuntary sale of shares by funders under security arrangements on Thursday December 14".

The transaction involved 98 447 130 ordinary shares at an average sale price of €0.4935. This therefore amounted to a total value of about €48.6m (about R763m).

Wiese is listed as the indirect beneficiary.

Voting pool 

Steinhoff said the entity in question, which is ultimately held and controlled by Wiese, was a member of a voting pool, which consisted of certain Steinhoff shareholders.

The Steinhoff note to shareholders did not mention who the others shareholders in the voting pool were.

"The parties to the voting pool had committed to certain arrangements with respect to their voting rights in Steinhoff, including an agreement to jointly exercise substantial control over the company," Steinhoff explained. 

It said it has been informed that the voting pool arrangements - including the joint exercise of substantial control - have automatically and immediately terminated as a result of the pool's combined voting interest falling below 30%, which happened as a result of the share sale.

Steinhoff advised shareholders and other investors in Steinhoff to exercise caution when dealing in the securities of the group.

The Financial Times of London reported that banks, including Bank of America and Citigroup, could lose more than €1bn on loans made to Wiese in September 2016 and secured against his shares in Steinhoff worth €3.2bn at the time. The FT based this on public documents issued by Steinhoff.

It pointed out that, because of the sharp drop of about 80% in Steinhoff's share price, the value of Wiese's stock held against the loans is now far less than his debt to the banks.

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