Wiese puts most of his Steinhoff losses to bed
Former chairman sells 630 million shares and nears the end of a multibillion-rand bad dream
The sale of around 630 million Steinhoff International shares by Christo Wiese was “involuntary” and believed to have been forced upon Wiese by his funders who include major global banks.
No details were provided but in 2016 Wiese, who had been the largest single shareholder in Steinhoff, pledged 628 million Steinhoff shares in collateral to borrow money from Citigroup, HSBC, Goldman Sachs Group and Nomura Holdings. The money was used by Wiese to participate in a share sale coinciding with Steinhoff’s acquisition of Mattress Firm and Poundland. At the time of the pledge the shares were valued at over R80 or over R50-billion in total.
They have been trading at around R6 during the past week pointing to a massive multibillion-rand loss. It is believed the banks did not have recourse to any of Wiese’s other assets, which suggests the loss rests with them.
“Christo was always heavily geared, he got rich by gearing up on the back of his convictions, it’s great when it works,” one trader told Business Day.News that Wiese had reduced his stake from 21% to 6.2% appears to have caused some additional jitters in the market and nudged the share down 6.57% on Monday to close at R5.55.
At the end of January Wiese told a parliamentary briefing into the collapse of Steinhoff, “I have not sold a single share in the company since the day I first started to acquire them in 2011”.
He said he could not say whether he believed the shares would recover some value as he was deemed to have access to insider information and would get in trouble. But he noted that many analyst reports did suggest there was value in the shares at their current levels.
Because he is no longer a Steinhoff director, having resigned from the supervisory board on 14 December, Wiese was under no obligation to make a public disclosure of the sale. A spokesperson for Steinhoff said the disclosure to the Dutch Authority for Financial Markets was in terms of the regulations where the company is domiciled.
“The disclosure relates to a requirement for shareholders to inform the regulator if their holdings increase or decrease by a certain percentage – this notification is the responsibility of the shareholders,” said the spokesperson.
However it appears the identity of the purchaser of the block of shares has not been revealed. The PIC’s CEO Dan Matjila said it would have been strategic to sell the stake to a consortium of South African investors so that control could remain in South African hands. The PIC holds a 7.5% stake in Steinhoff and may now be the single largest shareholder.