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Cape Town - ABSA is taking a company co-directed by former Steinhoff International CEO Markus Jooste to court in an effort to liquidate it and recoup R226m.
As first reported in Die Burger, ABSA has approached the Western Cape High Court in an attempt to order a provisional liquidation of Stellenbosch-headquartered Mayfair Speculators.
Company records show that Mayfair Speculators has two active directors, Jooste and Stefanus Potgieter.
In a document submitted to court on December 15, lawyers for ABSA argue that the court should place Mayfair Speculators under provisional liquidation.
The amount that it owes ABSA, according to bank letters, is R226 366 518.
Pay back the money
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.
Steinhoff shares have suffered a precipitous decline this month after the global retailer announced that it had red-flagged “accounting irregularities requiring further investigation” in its books, and retained PwC to conduct an independent investigation.
Its share price has dropped by about 90% since December 5, wiping billions off its market capitalisation.
The quick resignation of Jooste, and later of its board chairperson 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.
At the time, Steinhoff shares were valued at around R70. On Thursday at 15:20 they were trading at just R4.50 a share.
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”.
Fin24 could not reach Potgieter for comment on Thursday. ABSA is now arguing that Mayfair Speculators is in breach of its “share cover covenant” and must pay back the R226m it owes.
According to die Burger, the matter will be heard on Friday.
