THE BOTTOM LINE
Tekkie Town’s rift with Star has become a trifle tacky
Shoe chain is dying to get out of Steinhoff’s orbit, but it’s stuck in a web of murky management transactions
Another day, another Steinhoff story. That’s great for traders, (Steinhoff is one of the most closely tracked shares on the JSE), for journalists, who are easily drawn into high dramas, and for lawyers, who are drumming up millions of rands of business by the day.
It is not such good news for Steinhoff or for almost anyone related to Steinhoff such as 71%-held Steinhoff Africa Retail (Star) who just want to get on with their old day job.The latest development is news that Tekkie Town has served a summons on Star relating to a claim in respect of an alleged earn-out agreement. As the Star guys tell it, the earn-out agreement was something conjured up between former Steinhoff CEO Markus Jooste and Tekkie Town founder Braam van Huyssteen; they’re not even sure it’s a written document. Obviously the Tekkie Town team is confident they have a firm claim.
If cooler heads were allowed to prevail the obvious solution would be to unbundle Tekkie Town out of Star and let them go their separate ways. But the web of transactions that Jooste spun around him might make that obvious solution difficult to implement.And then there’s the pricing. Until December 2017 many people believed Steinhoff had overpaid for Tekkie Town. But the bulk of the payment was in Steinhoff shares and so it’s now looking like a really bad deal for Tekkie Town vendors.
And then there’s the “management investment vehicle” for which the board has made a R500-million provision. Shareholders might be more sympathetic of management’s plight if they weren’t so determined to distance themselves from Steinhoff. At one stage it did look as though association with Steinhoff was set to make the same members of management obscenely wealthy.