The Steinhoff group can tick off another box on its list of things to do to put the havoc of the last few years behind it.
On Monday (January 24) the Western Cape High Court approved and sanctioned Steinhoff’s Section 155 settlement process, after the group recently reached agreements with the last of several groups claiming damages following the accounting scandal in 2017.
The approval by the SA court opens up the way for Steinhoff to implement the international settlement, which includes Steinhoff International Holdings NV and all its subsidiaries, as well as the former SA holding company of the Steinhoff Group, Steinhoff International Holdings Proprietary Limited (SIHPL).
The sanctioning of the Section 155 proposal needed little more than a rubber stamp on Monday as the main issues were dealt with earlier.
The court approved the application quickly as Steinhoff cleared the two legal hurdles that remained when, a few weeks ago, it settled a claim for damages brought by Trevo, an investment trust based in Mauritius and listed on the Mauritius Stock Exchange, and another brought by the former owners of Tekkie Town.
In both cases, the pending legal processes had the potential to postpone the international settlement for years, with the potential to derail it completely.
Previously, different courts delivered judgments that seemed to give credibility to the Trevo and Tekkie Town vendors’ claims. The parties agreed to withdraw their claims after reaching an understanding with Steinhoff, removing the last legal obstacle.
The court sanctioning fixed the all-important “settlement effective date” when the settlement scheme will become effective.
Steinhoff said in an announcement following the court order, that the settlement effective date is expected to occur on or about February 15.
“The implementation of the global settlement requires numerous steps to be taken and payments to be made on and around the settlement effective date. SIHNV and SIHPL have undertaken preparations for the co-ordination of the steps required and will separately contact those counterparties who need to take any action (for example, to receive funds and/or PPH shares).
“No actions are currently required by any party prior to the settlement effective date, unless specifically requested by Steinhoff and/or its advisers,” says Steinhoff.
It added that formal withdrawal of the litigation that has been settled, including the withdrawal of the Tekkie Town vendors’ application for the liquidation of Steinhoff, will occur immediately following the settlement effective date.
The high court in the Netherlands approved the global settlement proposal earlier, which was necessary as Steinhoff is registered as a Dutch company. In fact, the [original] furore started when analysts in Germany started asking uncomfortable questions about Steinhoff’s figures.
Meanwhile, Steinhoff has been busy. Apart from finalising the €1.43 billion (nearly R25 billion) settlement, management has been trying to put the group back on track.
The new caretakers said right from the beginning that not everything is lost, and that Steinhoff owned a lot of good companies that were worth saving. Since then, it has listed Pepkor in SA, while US Mattress Firm Group Inc has started the process of listing on the New York Stock Exchange (NYSE).
Steinhoff announced at the end of September 2021 that Mattress Firm would proceed with its initial public offering. The company filed the required paperwork with the NYSE and the Securities and Exchange Commission (SEC) only last week.
The prospectus outlining the listing has not been issued yet and the share price and number of shares to be offered to the public have not been announced. However, Mattress Firm did disclose that “the shares of common stock to be sold in the offering will be sold by existing stockholders of Mattress Firm”. In other words, Steinhoff.
One cannot but conclude that the listing of Mattress Firm will give Steinhoff another avenue to raise some cash when in need.
Steinhoff shareholders are very interested in what is happening at the group. Statistics show that articles about Steinhoff top the list of online searches on the Moneyweb platform, while the share is among those that are watched closely every day.
Steinhoff also ranks as one of the most watched shares on most other financial news and trading platforms.
The share has recovered sharply from its lows of a few cents after its crash, although it seems impossible that people who bought in before the meltdown will ever get their money back.
The price increased to R5 recently, just below its 12-month high of R5.79. It fell back to R4.80 on Monday.
The R25 billion settlement equates to R5.85 per share, based on the 4.267 million Steinhoff shares in issue, showing that the settlement does not come close to covering losses when the share price fell from its highs of above R90.
It is important to note that the settlement is not distributed to all shareholders directly, but only paid to qualifying shareholders who registered claims.
As for the future: Steinhoff is due to announce its results for the year to end September 2021 later this week to give shareholders an indication of the progress of recovery and rebuilding the group.
Listen: Louis du Preez, CEO of Steinhoff, discusses the court-approved R25 billion settlement, and the way forward (or read the transcript)