Steinhoff: Wiese to repay eventually

The R3.5bn could turn out to be a 10-year loan.
Former Steinhoff chair Christo Wiese. Image: Waldo Swiegers, Bloomberg

Steinhoff’s flurry of Sens announcements continued on Wednesday, with the company announcing the terms of a new agreement with its former chair Christo Wiese that includes an undertaking to repay a €200 million (R3.5 billion) loan provided by Steinhoff to Wiese-related entities in November 2017.

The Sens announcement stated that an earlier conditional agreement, reported last month, between Steinhoff, Wiese-related entities and Conservatorium has become unconditional on the basis that the Wiese-related entities would support Steinhoff’s proposed global settlement.

US-based Conservatorium launched court actions against the Wiese-related entities last year claiming it was the legal successor to lenders who had provided the entities with €1.6 billion to purchase shares in Steinhoff.

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On Wednesday Steinhoff confirmed that the new agreements with the Wiese-related entities included agreement to document the partially secured five-year payment obligation between Steinhoff and Wiese-controlled Titan. The payment obligation relates to prepayments made to the entities ahead of the aborted transaction between Shoprite and Steinhoff.

Amended proposal

Details of the amended ‘Section 155 proposal’ were released on Tuesday and reveal that Titan now appears to dispute that it originally owed €200 million to Steinhoff. Previous versions of Clause 17.5 of the proposal made no reference to Titan disputing the €200 million obligation.

Shareholders first became aware that in late 2017 Steinhoff had made prepayments to Wiese-related entities of €325 million when the company released its 2017 annual report in May 2019.

According to the annual report the prepayment was made in anticipation of the Wiese-related entities selling 128 million shares in Shoprite to Steinhoff subsidiary Pepkor. The financial review states that: “Pepkor’s board exercised the call options [which gave it the right to acquire the shares] prior to 30 November 2017 as part of the planned expansion of the Pepkor group, subject to the fulfilment of conditions precedent.”

As part of that planned expansion Pepkor was listed on the JSE in October 2017 and renamed Steinhoff Africa Retail.

In October 2017 Steinhoff paid the Wiese-related entities €125 million and followed up with a €200 million payment in November 2017.

Days later news broke of financial irregularities at Steinhoff and the proposed transaction was abandoned.

€125 million was repaid in early 2018 and according to the 2017 annual report: “The balance of €200 million plus interest will be repaid on agreed terms.” No details of the agreed terms or the rate of interest were given.

However, Section 17.5 of the proposal now reveals that the €200 million carries an interest charge of 5.04% a year, which is rolled up and is comfortably below the 10% Steinhoff is paying its creditors in terms of the three-year debt-standstill plan.

The debt plus interest owed by the Wiese-related entities has to be repaid five years after the date that the proposal becomes effective, which market-watchers say is unlikely to be before 2022.

This means it could in effect be a 10-year loan.

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Which company loans related parties (Wiese’s companies) R3.5bn to purchase shares in Steinhoff?

This is some special kind of swindle.

Be careful what you say about Wiese

He enjoys protection from MoneyWeb and Steinhoff CE

Your messages would just be ignored / deleted.

Shocking – – Ryk, for allowing this.

Anyway, it seems Wiese’s PR is working

Moneyweb does not “protect” Christo Wiese. However, we deleted a few comments which were defamatory.

Why is it that when Wiese is around, there is always a whiff of impropriety in the air.
Or is it my imagination?

am i understanding it correctly or am i swinging the cat by the tail?: steinhoff pays its creditors interest @10% p.a but at the same time lend out money to relate parties and institutions at 5.04%p.a – surely it must have some or other tax implications for at least one of the parties involved???

The point to remember is that Shareholders suffer as result of this preferential treatment of Wiese.

MWeb should focus on their interest group – Shareholders – they do it perfectly well in other cases, but lately Wiese has become protected species

The game is rigged for the rich guys. Learn from that.

I cant stress this enough. The deal is made in order to see Steinhoff survive. Now ask yourself – why would a powerful US entity and SA’s top 5 powerful businessman make a deal which doesn’t make them money (or at the very least gets them back to 30% of what they invested in Steinhoff)

This to me implies Steinhoff has runway of reaching 10-15 rand in the next 12 months. Then after that, mattress firm is sold. What remains is a strong Australian business/eastern Europe’s fastest growing discount retailer and An African powerhouse. The central treasury of the company is in horrific shape but just don’t let this opportunity pass you.

Everything is in motion for Steinhoff to succeed now. Would be silly not to at least allocate a very small piece to the stock. Its a trade / not a stock.

If you have morals and want to invest in stocks like Fischer (which is about as tightly held as a infant by their mother)

Christo “Vrot van die skuld” Wiese

Seems author Du Toit in his edited book – Stellenbosch Mafia got correct info from Rupert about Wiese.

It is (or was) an offence for a company to assist a person financially in buying shares in the company.

Well, Wiese and his complex structures, made it work.

At a discounted interest rate – nogal!!

It is bad if you need to borrow money to buy shares to get a seat at the highest table.

(Apologies to Ann and MWeb if I offend with stating the truth)

I think this was prepayment for the Shoprite shares that Wiese would have sold to Steinhoff if that transaction had ever been completed. Basically, a bunch of people (some rich and famlus ones not just Wiese) wanted to externalise their investments by swapping shares in south african Shoprite for shares in dutch Steinhoff.

I know it sounds and smells the same but is not exactly the same as how Eskom prepaid the Guptas so that the latter could buy Optimum.

You people must be very careful with this legacy fiat Rands and accounting system. Appears it is used a lot for fraud and all kinds of illegal and apparent legal accounting sytems. If you lose your money there you have very little backing from the legal system and even the gov is powerless.Dont invest more than you can afford to lose, and you will likely lose it. It may even go to zero after the exuberance that looked every bit like Tulip mania many moons ago. Oh , sorry , I was thinking of bitcoin

Why don’t they simply refer back to the T&C from the board meeting that approved the personal loan of R3,500,000,000 to its chairman? Oh, wait, what?

The chairman and the ceo agreed the loan, not the board, and this happened three weeks before the company tanked and the ceo resigned.

Damn, that was fortunate timing for the chairman. Quite startling that the law allows this though.

I stand to be corrected – – when/if the truth comes out

I still believe that Wiese’s testimony to Parliament that he was not involved in running the company and had no knowledge of what was going wrong (bolt from the blue) would be proven to be incorrect. He was not a victim – other than driven by his own greed.

Media focus on Jooste is correct – he seems to have done some bad stuff – even by his own admission.
But, I suspect the Wiese PR machine (exist by his own admission) is driving the focus to remain on Jooste – away from Wiese.
Interesting times ahead.
Pieter Du Toit (journalist and writer) should keep his ears close to the floor – I sense a few further books coming out eventually.

End of comments.

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