The army of lawyers advising Steinhoff will have to do something more persuasive than to constantly remind the 90 claimants that they will all lose out if they can’t reach an agreement.
They will have to address the suspicion that the proposed global settlement sees former chair Christo Wiese getting far more than his fair share.
By one estimate, Wiese’s recovery rate is between eight and 15 times more than that of Steinhoff shareholders who bought in the market.
The parties behind that estimate, who speak on behalf of at least 20% of Steinhoff’s shareholders, last week vowed to
continue fighting the proposed settlement.
Seven months after the settlement was initially announced it appears few of the claimants are quibbling with the total sum available for allocation – almost €1 billion (about R17.7 billion) versus €10 billion of claims – the battle is about who gets what in the allocation process.
Failure to reach agreement could lead to liquidation, which would leave shareholders with nothing.
While an agreement would likely be followed by a rights issue, it would be done at such a heavily discounted price there would be little incentive for current shareholders.
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Steinhoff informed shareholders it had launched the Dutch arm of the “suspension of payments” procedure and had also launched a statutory compromise process under South African law.
That announcement followed news that agreement had been reached with US finance group Conservatorium, which had lodged no fewer than four legal challenges to Wiese’s R59 billion claim against Steinhoff.
While many accept a failure to agree could see Steinhoff being liquidated, the suspicion that Wiese is set to enjoy preferential treatment is encouraging them to continue a legal battle and risk that liquidation.
“It’s difficult to shake off the feeling that Wiese is being favoured by Steinhoff and its legal advisors,” one Steinhoff shareholder told Moneyweb.
Days after Steinhoff released its Conservatorium statement, Hamilton BV and Claims Funding Europe (CFE), a litigation funding company based in Ireland, released an update on the damages litigation being pursued on behalf of Steinhoff shareholders.
In its update on Friday, Hamilton/CFE said its initial concerns about the fairness of the proposed global settlement had increased now that Steinhoff had formally launched its proposal in the Netherlands and South Africa.
“Hamilton represents the clients of the major asset managers and pension funds in South Africa, and we are in a good position to prevent the proposal in its current form,” said CFE in its update.
It added that Steinhoff’s proposal sets up a dichotomy between so-called “market purchase claimants” who bought
shares on the open market, and so-called “contractual claimants” such as Wiese’s various entities.
“Steinhoff uses a number of different mechanisms to favour contractual claimants,” said CFE, noting that the overall impact of the various mechanisms is striking.
This article first appeared on Moneyweb and was republished with permission