Business 20.12.2017 10:19 am

Christo Wiese sells R2bn worth of Shoprite shares

Christo Wiese, formerly of Steinhoff International

Christo Wiese, formerly of Steinhoff International

Margin calls must be coming thick and fast.

Christo Wiese has begun unloading his stake in Shoprite shares, with sales totalling some R2.15 billion over the last three working days. This could be at the request of banks who have lent him as much as €1.1 billion to participate in various Steinhoff share sales.

The table below summarises the Sens put out just before the market closed on Tuesday:

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It appears that the shares could be getting sold to meet obligations to lenders. Bloomberg reported last week that Wiese had pledged as much as 628 million Steinhoff shares to a consortium of banks lending him money to buy more shares in the company.  As of last week he was attempting to negotiate a standstill agreement that would suspend the sale of shares by the likes of Bank of America, BNP Paribas, Goldman Sachs, and JP Morgan, until next year.

But local bank Firstrand/Rand Merchant Bank has been lending to Wiese taking Shoprite shares as collateral. In an interview conducted with CNBC Africa’s Fifi Peters on Monday December 11, RMB CEO Alan Pullinger confirmed that the bank has three types of exposure to Steinhoff. Firstly, to Steinhoff and group companies to provide working capital type facilities. Secondly, through facilities to Steinhoff Africa Holdings, which are “very well covered.” And thirdly, the bank has exposure to the Chairman (Wiese) through his investment company, and, crucially, states Pullinger, “there we are very well covered with Shoprite shares.”

It is therefore quite plausible that Firstrand/RMB would be the seller of the Shoprite shares yesterday, given that if it was lending to Wiese to buy more Steinhoff shares, the security in that loan has essentially vanished as the share price has collapsed from approximately R50.40 two weeks ago to yesterday’s R7/share (-86%).

Moneyweb did reach out to a Shoprite spokesperson on Tuesday evening but had not received a response at the time of publication.

Steinhoff

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But the sale will hardly put a dent in Wiese’s Shoprite shareholding. In Shoprite’s 2017 annual report, Wiese is listed as owning some 101.3 million shares equivalent to 16.8% of the company, which means this sale equates to roughly ten percent of his holding in the retailer.

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