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Markus Jooste's firm in battle over SA's Rascals candy maker

May 09 2018 08:15
Loni Prinsloo and John Bowker, Bloomberg
The investment company of former Steinhoff International Holdings Chief Executive Officer Markus Jooste is locked in a battle over a South African candy and drinks maker it is trying to sell to repay defaulted debt.

Minority shareholders of Lodestone Brands are trying to block Jooste’s Mayfair Holdings from selling the producer of Rascals sweets and Fusion soft drinks, according to documents filed in the Johannesburg High Court in March. Mayfair hired Standard Bank Group to auction the company, in which it holds a controlling stake, the filings show.

The legal challenge comes as Mayfair faces a year-end deadline to dispose of assets so it can repay bank debt of R959m. The loans were backed by Steinhoff shares, which collapsed after the retailer in December announced an investigation into a hole in its accounts which resulted in Jooste quitting on the same day.

Executives at the owner of Conforama in France and Mattress Firm in the US are battling to keep more than 12 000 stores in 30 countries in operation as they seek ways of restructuring €10.4bn of Steinhoff’s debt.

The former CEO has been referred to a South African anti-corruption police unit, while an investigation into the full extent of financial wrongdoing is still months from completion. Jooste hasn’t spoken publicly since he left the company.

Business rescue

While Jooste also resigned as a Mayfair director shortly after his departure from Steinhoff, his family trust is the sole owner. Stefan Potgieter, Jooste’s son-in-law, remains on the board and is leading the break-up of the company together with a group of business-rescue experts.

Mayfair has about R1.4bn worth of assets that can be disposed of, including real estate and race horses as well as its stake in Lodestone. Mayfair is also owed about R620m by at least 10 other investment companies.

Lodestone’s co-founders, who have offered to acquire the business through a management buyout, say that Mayfair is attempting to force through an exit that would jeopardize the future of the company and disadvantage other investors, according to their affidavits.

Standard Bank has identified 24 potential buyers and investors for Lodestone, which also sells baby-care products, the documents show.

In his legal response, Potgieter said the minority shareholders, who are being led by Gregory Senior, are attempting to secure Mayfair’s majority Lodestone stake at a lower price than would be achieved through an auction. A competitive process would result in the highest possible sale price for all investors, regardless of who is successful, he said in documents.

‘Financial predicament’

“It is in the interests of Lodestone to separate from Mayfair Holdings, given the reputational effect of that association, as well as the financial predicament in which Mayfair finds itself,” Potgieter said.

Standard Bank and Senior declined to comment. Potgieter and Jooste didn’t respond to requests for further comment.

Jooste and Potgieter both stand to benefit from a successful break up of Mayfair, as the company owes more than `R200m to entities linked to the two men, court filings show.

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markus jooste  |  retail  |  sweets


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