Pepkor chair on Steinhoff and Tekkie Town: It was the Year of the Struggle | Fin24

Pepkor chair on Steinhoff and Tekkie Town: It was the Year of the Struggle

Nov 27 2018 09:49
Carin Smith, Fin24

The year 2018 will go down in the company's history as the Year of the Struggle - one filled with unexpected crises and drama and requiring extraordinary resilience and actions from board members and management alike, Pepkor chair Jayendra Naidoo said on Monday.

He spoke at Pepkor's annual results presentation for the year ended September 2018.

"During this year the company has had to play defence quite a lot and has focussed on consolidation," said Naidoo.

The name change from Steinhoff Africa Retail (STAR) to Pepkor was not only symbolic, the Naidoo said.

"The name change reconnects us to the special history of this company and represents the firm commitment by the board and management to provide our customers the very best deals while operating in line with the highest standards of good governance, business performance and ethics."


Naidoo added that, under the new leadership of Louis du Preez and Heather Sonn, Steinhoff has succeeded in recapitalising Mattress Firm in the US and is now in the final stages of negotiations to conclude a successful restructuring and lock up agreement with its European creditors.

"There are positive implications for Pepkor from these events with regard to the perception of an overhang on Pepkor shares. With Steinhoff currently holding 71% of Pepkor Holding shares, it will be positive news for Pepkor shareholders if these developments enable Steinhoff to turn its focus for the next few years to creating value from its existing Pepkor shareholding, rather than disposing of assets to service their debt," said Naidoo.

"From our review of the publicly available information, it also appears that the market risk of a sale by Steinhoff of its Pepkor shareholdings is further mitigated through its creditors having a first right of refusal on any asset disposals by Steinhoff. We await the final conclusions between Steinhoff and its creditors with interest."

According to Naidoo, governance has been the top priority for the Pepkor board this year. The classification of each board member was reviewed afresh by an independent expert to determine which directors can be considered independent. New board members were appointed equipping the board with what Naidoo regards as added expertise in retailing, finance, legal and IT.

Tekkie Town

"The unfortunate events at Tekkie Town, and the unprecedented mass resignation of over 100 key people, was a major blow at the time. However, despite that, Tekkie Town performed well under interim management," said Naidoo.

"With the new and permanent management team that has now fully replaced all those who have left, Tekkie Town is stabilised and performing at a satisfactory level."

He said Pepkor expects to continue good organic growth.  It will also consider potential acquisition opportunities where these add value and fit with the strategy of the group.

The group has set reduction of debt as a high priority for the coming years.

"The company's high tax rate needs careful attention, its portfolio of assets needs a strategic review, and the company must continue to improve its systems and risk management," said Naidoo.

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steinhoff  |  tekkie town  |  pepkor  |  jayendra naidoo  |  retail


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