JOHANNESBURG — The situation for embattled former Steinhoff CEO Markus Jooste is clearly getting so desperate that he’s engaging in fire sales of many assets that he either directly or indirectly owns stakes in. Jooste’s investment company, Mayfair Holdings, is trying to quickly sell Lodestone Brands, which is the maker of Rascals candy. However, minority shareholders don’t see it as a sweet deal and have gone to court. – Gareth van Zyl
(Bloomberg) – The investment company of former Steinhoff International Holdings NV Chief Executive Officer Markus Jooste is locked in a battle over a South African candy and drinks maker it is trying to sell to repay defaulted debt.
Minority shareholders of Lodestone Brands Pty Ltd. are trying to block Jooste’s Mayfair Holdings Pty Ltd. from selling the producer of Rascals sweets and Fusion soft drinks, according to documents filed in the Johannesburg High Court in March. Mayfair hired Standard Bank Group Ltd. to auction the company, in which it holds a controlling stake, the filings show.
The legal challenge comes as Mayfair faces a year-end deadline to dispose of assets so it can repay bank debt of 959 million rand ($76 million). The loans were backed by Steinhoff shares, which collapsed after the retailer in December announced an investigation into a hole in its accounts which resulted in Jooste quitting on the same day.
Executives at the owner of Conforama in France and Mattress Firm in the U.S. are battling to keep more than 12,000 stores in 30 countries in operation as they seek ways of restructuring 10.4 billion euros ($12.3 billion) of Steinhoff’s debt. The former CEO has been referred to a South African anti-corruption police unit, while an investigation into the full extent of financial wrongdoing is still months from completion. Jooste hasn’t spoken publicly since he left the company.
The shares declined 0.2 percent in Frankfurt Tuesday, and have plunged more than 95 percent since the financial wrongdoing emerged on Dec. 5.
While Jooste also resigned as a Mayfair director shortly after his departure from Steinhoff, his family trust is the sole owner. Stefan Potgieter, Jooste’s son-in-law, remains on the board and is leading the break-up of the company together with a group of business-rescue experts. Mayfair has about 1.4 billion rand worth of assets that can be disposed of, including real estate and race horses as well as its stake in Lodestone. Mayfair is also owed about 620 million rand by at least 10 other investment companies.
Lodestone’s co-founders, who have offered to acquire the business through a management buyout, say that Mayfair is attempting to force through an exit that would jeopardize the future of the company and disadvantage other investors, according to their affidavits. Standard Bank has identified 24 potential buyers and investors for Lodestone, which also sells baby-care products, the documents show.
In his legal response, Potgieter said the minority shareholders, who are being led by Gregory Senior, are attempting to secure Mayfair’s majority Lodestone stake at a lower price than would be achieved through an auction. A competitive process would result in the highest possible sale price for all investors, regardless of who is successful, he said in documents.
“It is in the interests of Lodestone to separate from Mayfair Holdings, given the reputational effect of that association, as well as the financial predicament in which Mayfair finds itself,” Potgieter said.
Standard Bank and Senior declined to comment. Potgieter and Jooste didn’t respond to requests for further comment.
Jooste and Potgieter both stand to benefit from a successful break up of Mayfair, as the company owes more than 200 million rand to entities linked to the two men, court filings show.