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- Steinhoff has hiked its total settlement offer to claimants from around €970 million to €1.237 billion.
- This is thanks to a much strong performance as the pandemic subsided, and rand strength.
- Some investors will receive 66% more than originally offered.
Steinhoff has bolstered its settlement offer to claimants by around R4.5 billion.
The Stellenbosch-headquartered furniture and household goods conglomerate is facing over 90 separate legal claims in South Africa, Germany and the Netherlands stemming from the precipitous drop in its share price in December 2017.
The claimants are arguing that they would not have bought the retailer's shares at the price they did if they had known the true state of its finances. The conglomerate had to restate certain of its past financial results after a forensic probe found that a "small group" of former executives - including former CEO Markus Jooste - inflated its profit and asset values for years.
Last year, Steinhoff proposed a "global settlement" to settle these claims once and for all, without needing each separate claim to be argued in court.
The group has proposed paying out about €900 million to settle all the claims it is facing, with its former auditor Deloitte agreeing to pay €70 million in compensation to claimants. Steinhoff and Deloitte have both said that their offers would not constitute an admission of liability or wrongdoing.
But on Friday, Steinhoff announced that the total offer will now be hiked to €1.237 billion. Claimants who held Steinhoff shares – also unit trust investors – as well as those who received Steinhoff shares in return for stakes in their businesses, will receive 66% more than they were offered last year.
But Steinhoff’s settlement offer to a group that represents its former chairperson, Christo Wiese, will remain unchanged at R7.9 billion.
The company can afford to bump up the settlement offer thanks to "a material improvement" in its performance over recent months, as the impact of the pandemic subsided, Steinhoff said. The strengthening of the rand also assisted.
"Steinhoff continues to believe that the Steinhoff global settlement proposal, including the materially increased offer, represents a significantly better outcome for litigants and creditors relative to the outcomes in the event of no settlement," the company said in a statement on Friday.
Legal setbacks
Steinhoff has faced two legal setbacks in recent months, which put the success of its settlement offer in doubt.
Recently, the Western Cape High Court ruled in favour of a case brought by Hamilton and another claimant, Trevo Capital – finding that Steinhoff had breached the Companies Act when it provided financial assistance to an entity in its stable in 2019.
The Western Cape High Court also recently agreed to hear an application from the former owners of shoe retailer Tekkie Town, to have the retailer liquidated. They want to prevent the settlement offer to Steinhoff’s creditors from going ahead. The application will be heard in September.
But on Friday, Steinhoff said that despite these challenges, it is seeing progress in the implementation of its global settlement proposal, and that it has received support from four out of the six claimant groups.
