As Steinhoff inches its way towards the still-distant finishing line, it’s difficult not to feel some respect for the tenacious executives who have spent much of the past four years in the corporate equivalent of hand-to-hand warfare with a variety of aggrieved investors.
Of course it helps that all that tenacious work is extremely well-paid. It means the executives win whatever happens. Not so the shareholders for whom ‘winning’ only means losing a little less.
Of course the biggest winners in all of this will be the financial creditors who picked up Steinhoff loans at a fraction of their face value after the December 2017 announcement about accounting irregularities at the company. They are not only set to get 100c on the rand when things are eventually sorted out, but in the meantime enjoy 10% interest each year. This extremely generous interest payment is rolled into the initial €9 billion, which presumably means the loan is now over €11 billion.
As things stand it seems the biggest threat to finalisation of the Section 155 scheme of arrangement is the liquidation application brought by the Tekkie Town founders led by Braam van Huyssteen and Bernard Mostert.
While it looks unlikely they will manage to throw things off course, they could certainly delay resolution. Van Huyssteen and his co-founders have announced they are opposing the application for the South African court to sanction the crucial Section 155 scheme of arrangement. However, given that the scheme received 100% support from the creditors it’s hard to see how the court would not approve it.
It’s also difficult to imagine that the Constitutional Court will get involved in the matter.
Steinhoff has apparently approached our top court in a bid to postpone the Western Cape Court’s hearing on Van Huyssteen’s liquidation application. A speedy and favourable (for Steinhoff) ruling from the Constitutional Court would secure high court approval of the Section 155 scheme. That approval would remove any legal threat from Steinhoff’s creditors.
The risk for Steinhoff is that if the liquidation application is successful, the liquidator gets control of the company and will retain that control even if Steinhoff appeals the liquidation ruling.
It’s likely Steinhoff is particularly keen to ensure the infamous PwC report is not unveiled during a possible liquidation process; such unveiling would stir up all sorts of antagonisms and court actions.
However, although white collar crime is a serious challenge for the country, it might not be deemed of sufficient constitutional interest to warrant the Constitutional Court’s urgent involvement.
Listen to Moneyweb editor Ryk van Niekerk’s interview with Christo Wiese below (in Afrikaans) or read the English transcript here.
On a more prosaic note and just to prove that the wheels of justice and regulation do grind slowly, earlier this month the Companies and Intellectual Property Commission (CIPC) won a court action against JCI Limited.
Most investors might have forgotten about JCI, but in its day – well, particularly from the time in the mid-1990s when it was the subject of an Anglo American BEE/unbundling exercise – it was almost as controversial as Steinhoff has become.
It seems CIPC inspectors found that for the period 2011-2017 JCI had not compiled audited financial statements as required by the Companies Act.
After initially seeking to have the CIPC’s compliance notice set aside, JCI conceded that it was unable to prepare the financial statements as required by the Companies Act.
In terms of a settlement agreement reached with the CIPC, JCI must now pay an administrative fine of R1 million and convene a shareholders’ meeting to adopt a special resolution for the voluntary winding up of JCI Limited.
African Rainbow Capital
Talking of BEE it looks as though Patrice Motsepe, Johan van Zyl and Johan van der Merwe are the leading BEE tycoons of the early 21st Century.
The key players behind African Rainbow Capital (ARC) seem to be able to hoover up whatever deals take their fancy.
It is quite amazing that thanks largely to ARC’s acquisition of a stake in Sanlam Investments last year, the figure for assets managed by black-owned fund managers has almost doubled. As at June 2021, black-owned firms managed R1.15 trillion, up from R667.8 billion a year earlier. Sanlam Investments accounted for R344 billion of the increase.
Meanwhile Sasol’s determination not to take a ‘big bang’ approach to carbon emissions isn’t going to win it any friends in the environmental activist community.
The company, which is South Africa’s second largest emitter of greenhouses gases, has tripled its “aspiration to reduce emissions by 2030” and is putting in place plans to transform the group by 2050.
Tripling aspirations sounds quite exhausting and also remarkably vague.
Perhaps all executive bonuses should be suspended until these aspirations make some tangible appearance in the way Sasol operates.