PIC admits to Steinhoff unease as far back as 2016
It has now emerged that there was some shareholder concern about Len Konar’s long tenure on the Steinhoff board as far back as 2016.
During the parliamentary review on Wednesday the Public Investment Corporation confirmed that it had voted against the re-appointment of Konar, a non-executive director, at the group’s extraordinary general meeting in May 2016.The PIC accounted for around half of the 22% of shareholders at the extraordinary general meeting who opposed Konar reappointment to the board.
Despite the opposition not only was Konar re-appointed he was appointed deputy chair of the supervisory board and secured his place on three board committees – governance and nomination, audit and risk and, human resources and remuneration. The PIC told the parliamentarians their concerns related to the fact Konar had been on the Steinhoff board since 1998.At the annual general meeting in March 2017 shareholders voted overwhelmingly in support of the group’s remuneration policy that will give Konar fees of R4-million for financial 2017. Last week Konar said that since October the non-executive directors have been working on Steinhoff matters without fees. Fees for the additional work, which is understood to be considerable, have not yet been approved at an AGM.
The PIC also voted against the reappointment of long-serving Claus Daun again questioning his independence.
PIC chief Dan Matjila said tenure affected the nature of the relationship between the non-executive directors and the CEO and was a particularly important issue when the CEO and chairman have dominant personalities.
The situation at Steinhoff was aggravated by the Wiese family’s material shareholding, which the PIC believed, enabled it to act in concert at the expense of minority shareholders.Matjila contends Steinhoff is not worth zero and identified €10-billion of non-core assets that could be sold off to improve the group’s balance sheet. These included properties of €3.8-billion, investments and loans of €1.5-billion, its €3.8-billion investment in Steinhoff Retail Africa (Star) and its KAP shares worth €537-million. He acknowledged a final figure for the value would only be known after PwC had completed its investigation. Matjila said the Steinhoff board was now under pressure to demonstrate its ability and willingness to unlock value within the company.During his unprepared presentation to the MPs former Steinhoff chairman Christo Wiese said he was restrained from commenting on any inherent value in the company until the PwC investigation had been completed. But he said he could refer to several reports by analysts pointing out just how much value there is in the group. “I happen to know the bulk of the businesses in the group, in terms of profitability are Pepkor operations, they are good businesses.”
On Thursday the JSE notified Steinhoff shareholders that as the company’s variable rate, cumulative, non-redeemable, non-participating preference shares have a primary listing on the local bourse they will be suspended if the company fails to submit its annual report by February 28. Similarly holders of bonds issued by Steinhoff Services, which have a primary listing on the JSE, were advised the bonds would be suspended if the annual report is not submitted by February 28.
However because Steinhoff’s primary listing is on the Frankfurt Stock Exchange the JSE is not considering its suspension. Nicky Newton-King, CEO of the JSE said the local bourse could not suspend the share unless or until the FSE did as it would merely prejudice South African based shareholders.
On Thursday Steinhoff closed marginally weaker at R6.75.