Steinhoff gets court approval for global settlement

After meeting some statutory requirements ‘in the next two to three weeks we will make payments to the claimants’: Steinhoff CEO Louis du Preez.

SIMON BROWN: I’m chatting now with Louis du Preez. He’s CEO of Steinhoff. The court approved this morning, in a fairly short court settlement, the Steinhoff R25 billion settlement.

Louis, I appreciate the time this evening. Is this now the final step? You can start making the payouts, everything is now processed?

Read: Steinhoff paves way to complete settlement of global claims (Dec 2021)

LOUIS DU PREEZ: Yes, evening everyone. That is so – we’ve obviously been working on this for some time. The court approval [came] this morning with some procedural issues here and there. We must file the court order with the CIPC (Companies and Intellectual Property Commission), which is a statutory requirement. And then in the next two to three weeks we will make the payments to the claimants.

SIMON BROWN: I must stress, when I say it was 30 minutes in court this morning, it was years leading up to that 30 minutes. So payment’s fairly quick then, and you’re saying maybe [by] mid-February payments will start to happen?

LOUIS DU PREEZ: That’s correct. You have to split them, so the contractual claimants will get their money slightly earlier. The South African claimants. The money goes to the Steinhoff Recovery Foundation. The market-purchase claimants will have another three months for those who’ve not submitted their claims have to submit their claims.

At the end of that period the pot of money determination, how that will be divided, will be made by the Steinhoff Recovery Foundation and shortly thereafter the payments will be made for the market-purchase claimants.

SIMON BROWN: Okay. These payments, these are people who would’ve been holding Steinhoff back in December 2017?

LOUIS DU PREEZ: Correct. One of the requirements to qualify as a claimant is you had to be an end-holder as of 6 December 2017. The full details for listeners who still want to submit claims can be found on our website and there’s a settlement page. So there are full details for the people who still want to submit claims.

SIMON BROWN: Any sense of how much people will get relative to – I suppose it’s how long is a piece of string to a degree. When did they enter the process and when did they buy, and so forth. But any sense of what people can get out relative to the loss?

LOUIS DU PREEZ: If you look at it, you have to split them again. These things are quite complicated, as you can appreciate. So the people who have claims at the Dutch company at the NV side will have a recovery. We work on estimates of how many people we think will submit claims. There’s a pot of money that always stays stable, so it then depends on how many people submit claims. We think the recovery rate will be in the region of 12.8%, and for the South African market-purchase claimants in the region of 14.8%. What’s excluded from those numbers, important to remember, will be the recoveries at Deloitte and the the D&O insurers will submit or contribute on top of that.

SIMON BROWN: Gotcha. Okay, 14.8% is not the worst number in the world. I’ve heard some claims that come back at closer to 1% or 2%. Does this also include the large shareholders – and I’m thinking particularly of Christo Wiese and there were a couple of others, not the sort of individuals who’ve maybe got a private share account somewhere, but the larger claimants as well?

LOUIS DU PREEZ: Again, you have to make the distinction. So the contractual claimants will have a slightly higher recovery rate. They are in the region of about 28%, 29%, and these are what I refer to as the market-purchase claims. To give you some idea, Simon, the research that we’ve done –  and again there’s no exact science… This is new in South Africa; the normal rates on this are somewhere between 5% and 8%. So we feel quite comfortable with the significantly higher than call it ‘world norms’.

SIMON BROWN: Yeah, 5% to 8% sort of sinks in with what I think most folks would’ve expected, certainly if people were asking me over the last couple of years.

For Steinhoff now as a business – and there is some process as you mentioned, but that all aside – is this now a line in the sand where Steinhoff can now look forward and focus on running the business and running the assets? Pepkor locally, your UK assets and Europe assets and the like?

LOUIS DU PREEZ: Precisely. This a major milestone for us, in the three-step restructuring process. So the two big steps have now been completed with the financial restructuring, debt *** now the litigation. The debt will now be automatically extended till 2023. So we’ve got 18-plus months to engage with that.

I think there’s a twofold approach. One is, as you say, hands back on the [wheel], make sure that the underlying businesses have the breathing space, that they don’t have this hanging over their head, and those excellent teams can focus on the businesses. From the corporate side we will, and we have already started, engaging with our financial creditors to make sure how we deal with this debt burden. It’s still very, very large and has to be dealt with. And that will be the main focus over the next six to nine months.

SIMON BROWN: The key point there is  ‘operational’ rather than ‘legal’ from a legacy perspective. That’s the key point.

LOUIS DU PREEZ: Correct. I’ll hopefully have [fewer] discussions with lawyers and more with business people over the weeks to come.

SIMON BROWN: Absolutely. I appreciate that, and I’m sure you and your team appreciate that even more.

Louis Du Preez, CEO of Steinhoff –  that final approval for a R25 billion settlement has been approved by the courts. If you were holding Steinhoff shares back in December 2017, and you haven’t submitted a claim, head to their website; there are details. You can still submit. You’re going to get some money back – not all of it, but you’re going to get some back, which is better than nothing.

Louis, I appreciate the time.

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The people that knew the most (or should have), and in some cases the people that were part of the crime (Southern View), get back the most.

Lekker oom, lekker.

End of comments.

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