Steinhoff saga still dragging on

Just four weeks into the new year and the Steinhoff share price has already almost doubled.

It is the strongest and most sustained run in the share price since the group’s implosion a little over three years ago;
an implosion that saw the share price plunge from around R56 in late November 2017, to a mere R5 a month later.

It will be of little comfort to those who suffered in the R200 billion-plus value wipeout to know the current R2.10 is the strongest it’s been since early 2019.

Which way the share price will go from here is anyone’s guess, but it’s significant that it has held above R2 despite some relatively heavy selling midway through January.

The share’s performance has little to do with the performance of its underlying businesses.

Investors are looking closely for signs of progress with the board’s long drawn-out battle to avoid liquidation, while occasionally glancing at the operations.

Conservatorium conundrum

A key part of the battle against liquidation is the proposed $1 billion global settlement with the multiple parties that have launched billions of rands of legal claims against Steinhoff.

US-registered company Conservatorium has lodged legal action against the proposed R9.5 billion payout to
Christo Wiese-related entities.

Conservatorium claims it is the legal successor to a group of financial institutions that had extended funds to Wiese to enable him to acquire the Steinhoff shares underpinning his R59 billion claim against Steinhoff.

Conservatorium’s battle over the proposed settlement, which is far from resolved, is considered the greatest risk to an orderly liquidation-free resolution to Steinhoff’s troubles.

Pepco progress

Meanwhile investors seem to have taken heart from the group’s recent announcement it had resumed the “evaluation process” to determine the strategic future of Europe-based Pepco Group.

In November 2019, Steinhoff said Pepco’s options included a potential public listing, but subsequent Covid-related issues put the process on hold.

In a Sens statement issued earlier this week, the group said: “The evaluation process has now resumed.

“The process remains in its early stages and no definitive decision has been taken with respect to any specific course of action or timing at this point.”

Tekkie Town battle

On Wednesday, the former owners and management of Tekkie Town provided an update on their prolonged battle with Steinhoff and Pepkor, which has assumed control of the Tekkie Town business.

“Duped into swapping their equity in a highly profitable, cash-generative business for shares in Steinhoff in 2016, the
Tekkie Town team has marched slowly and steadily towards their day in court,” said the statement.

Their continued focus, said the statement, was to restore their controlling interest in a business they built, one store at a time.

That business was injected into Pepkor ahead of its separate listing, as Steinhoff Africa Retail, on the JSE in October 2017.

Last year the Supreme Court of Appeal (SCA) overturned a high court order in Tekkie Town’s favour that banned Steinhoff and Pepkor from selling or even issuing shares in the Tekkie Town chain.

The SCA said the Tekkie Town team had failed to prove fraud by former Steinhoff CEO Markus Jooste.

This week, former CEO Bernard Mostert said his Tekkie Town team has now successfully joined Pepkor to their legal
proceedings and is set to claim restitution and further damages directly against Pepkor.

“On Wednesday, Justice Lee Bozalek ruled the Tekkie Town claimants have 20 days to amend their restitution and unjustified enrichment claim against Pepkor and its subsidiaries.”

However, Pepkor said Justice Bozalek’s ruling was in favour of Pepkor.

“The ruling states that the ex-owners of Tekkie Town failed to make out a factual or legal basis for their case against Pepkor.

“Pepkor is a separate legal entity and cannot be held accountable for the alleged irregularities that happened at Steinhoff.”

And so the Steinhoff saga looks set to drag on even as the share price picks up.

This article first appeared on Moneyweb and was republished with permission

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