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Steinhoff acting CEO repays share-backed loan taken days before plunge

May 04 2018 09:59
Loni Prinsloo and John Bowker, Bloomberg

Steinhoff International [JSE:SNH] said acting chief executive officer Danie van der Merwe repaid a R26.4m loan backed by company shares that he took out a week before the retailer’s stock collapsed because of an accounting scandal.

The timing of the loan raises questions about how much Van der Merwe knew about the financial malpractice that has brought the company to the brink of collapse.

Acting chairperson Heather Sonn told investors last month that any current executive would quit if they were implicated in any wrongdoing, while Steinhoff is the subject of legal claims including a R59bn lawsuit by former biggest shareholder Christo Wiese, who also served as chairperson of the company.

Van der Merwe’s personal investment company Ruby Street Investments borrowed the funds from Investec [JSE:INL] on November 29, the same day that companies owned by former CEO Markus Jooste and his son-in-law Stefan Potgieter took out a R93m loan from the same bank, according to a court filing by Investec in December.

Both loans were backed by Steinhoff stock and were arranged by Potgieter.

Steinhoff reported accounting irregularities on December 5, causing the shares to crash more than 80% in three days. Jooste quit immediately and has since been referred by the company to an anti-corruption police unit. He hasn’t commented publicly since.

Van der Merwe was Steinhoff’s chief operating officer at the time and was made acting CEO on December 19.

Van der Merwe was sued alongside Jooste and Potgieter by Johannesburg-based Investec days after the Steinhoff share collapse.

The bank said that when the loans were agreed all three must have been aware of accounting concerns that led to the plunge in the share price and didn’t inform the lender, according to the court filing. The clerk of the High Court in Cape Town said she wasn’t aware of any formal responses filed in the lawsuit.

Private loan

A Steinhoff spokesperson said Van der Merwe had a private-loan arrangement with his personal bank at the end of November and has since settled the debt.

It’s standard practice for lenders to accept personal assets as security for loans and the transactions have no implications for the company, she said in an emailed response to questions. Van der Merwe didn’t respond to a request for comment.

Investec has settled the matter with the relevant parties, the bank said in emailed comments, declining to comment further. Neither the lender nor Steinhoff detailed how or when Van der Merwe repaid the loan.

Ruby’s loan request was the company’s first from Investec since December 2012, the lender said in the court documents. Van der Merwe joined the Steinhoff board in 1999, the year before Jooste became CEO.

Jooste’s investment company, Mayfair Holdings, has been given until the end of the year by lenders to sell as much as R2.08bn in assets ranging from real estate to racehorses to repay almost R1.6bn of defaulted loans, according to an agreement between Mayfair and its creditors seen by Bloomberg.

That includes the R93m loan taken out on November 29. The accord makes no mention of Ruby’s dealings with Investec. 

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