Steinhoff says it has averted collapse – and secured 120,000 jobs

Scandal-hit retail group Steinhoff says it has effectively averted the threat of imminent collapse, coming out of its widely-publicised accounting saga, while securing 120,000 jobs attached to its global operations – 50,000 of which are in South Africa.

This is contained in a presentation the group’s delegation will put to Parliament on Wednesday, which briefs lawmakers on the current status and progress being made in investigations into the scandal.

Much of the relief, it said, is due to a lock-up agreement forged by the group and its creditors, which it said will bring some financial stability to the company until 2021 at least.

In this time, the group said it will work at restructuring its debt and rebuilding value within its operations, while also finding those responsible for its financial crisis, and holding them to account.

Steinhoff’s accounting scandal centred around alleged fraud at the company, after auditors refused to sign off on the the group’s finances, which led to CEO Markus Jooste resigning in December 2017.

Following the resignation, the company’s share price tanked, wiping off as much as 95% of its value.

In unaudited interim results (to March 2018), the group reported a loss of €599 million, extended from a restated loss over the previous period of €362 million.

Despite its financial position, the group said that it is making progress in turning things around. It highlighted the following:

  • The threats of imminent collapse have effectively been averted; interim arrangements have been made with creditors (e.g. the Lock-up Agreement); and there have been structured disposals of certain assets;
  • Substantial debts have been repaid (e.g. the African debt);
  • Steinhoff has met with various regulators and dealt with their requests;
  • A Section 34 report (the Prevention and Combatting of Corrupt Activities Act) has been submitted, and various interactions with law enforcement officials are ongoing;
  • The group intends to reclaim bonuses paid in the past to certain senior executives under the relevant Dutch code (to the extent applicable and appropriate);
  • Virtually all of the group’s 120 000 jobs have been secured.


The group said that the PwC investigation in to the entire scandal is on track, and that once those who are responsible for the saga are identified, the appropriate action will be taken.

Former CFO Ben la Grange will appear before Parliament on Wednesday (29 August) to answer for his role in the matter, while ex-CEO Markus Jooste has also agreed to appear before lawmakers – but a week later (5 September), and with limitations on what can be asked.

Jooste is currently under investigation by the Hawks, and Steinhoff’s delegation has also stated that it may be restricted in what it can say, due to legal processes underway.

“Given the gravity of the situation, you will appreciate that the board (including the individuals present here) remains legally and otherwise quite constrained in what it is able to communicate publicly. We say this on the advice of the company’s lawyers,” it said.

Legal proceedings

Steinhoff is facing several lawsuits, and also needs to answer to regulators and lawmakers in the countries where it operates.

Among shareholders, the group faces several claims for declaratory relief in relation to damage alleged to have been suffered by shareholders due to investing in Steinhoff securities.

In Germany, there is group action where Steinhoff International Holdings NV faces the equivalent of a class action – with similar action being sought by South African shareholders.

Among its vendors, a summons has been received for claim at Steinhoff International Holdings Proprietary Limited, as well as a reversal of the transfer of the European assets effected in 2016 and a damages claim at the group.

There is also a claim from GT Ferreira / Tokara BEE Trust, other PSG vendors and Tekkie Town.

The group outlined other claims, which includes a joint venture dispute with possible settlement, co-shareholders declaring a dispute regarding the distribution of any settlement proceeds, and ongoing loan claim proceedings which will play out over the next few months.

Other issues that need to be dealt with include penalties with tax authorities, BaFin and the JSE.

You can view the group’s full presentation below.

Steinhoff Parliament Presentation August 2018 by BusinessTech on Scribd

Read: Steinhoff hit with R1 million fine for not disclosing ratings downgrade

Must Read

Partner Content

Show comments

Trending Now

Follow Us

Steinhoff says it has averted collapse – and secured 120,000 jobs