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Steinhoff chair Christo Wiese QUITS as financial scandal deepens

JOHANNESBURG — The situation at Steinhoff just keeps going from bad to worse. Late last night, Steinhoff announced that its chair and billionaire Christo Wiese stepped down from the company’s supervisory board. This comes after Steinhoff yesterday dropped a bombshell by admitting that its 2016 financial results couldn’t be relied upon and that they would be restated. Either the company lied to shareholders or was grossly irresponsible with its accounting. Its off-balance sheet saga has already come sharply under the spotlight. – Gareth van Zyl

By Nick Turner and Eric Pfanner

(Bloomberg) — Steinhoff International Holdings NV’s chairman and largest shareholder, South African billionaire Christo Wiese, is stepping down from the supervisory board after an accounting scandal engulfed the retail giant.

Christo Wiese, billionaire and chairman of Steinhoff Holdings NV. Photographer: Waldo Swiegers/Bloomberg

The board accepted Wiese’s resignation to resolve questions of conflict of interest, the owner of furniture chains such as Mattress Firm in the U.S. and Conforama in France said in a filing Thursday. Heather Sonn, a member of the board and its independent subcommittee, will take the role of acting chairman.

The resignation comes a day after Steinhoff said its accounting errors stretch back into 2016, highlighting the extent of wrongdoing at the retailer that’s led to a more than 80 percent stock slump since the beginning of last week. The retailer is due to meet with banks to try to navigate a way out of its crisis, which has wiped more than 10 billion euros ($11.8 billion) off the value of the company.

At stake is the future of a retailer with 130,000 employees and international brands that also include U.K. discounter Poundland. Wiese, 76, had stepped in to lead the company on an interim basis last week after Markus Jooste quit as chief executive officer as Steinhoff postponed publishing its financial results. Auditor PwC was appointed to probe accounting irregularities.

Wiese’s son Jacob also resigned from the board, Steinhoff said. The departures are the company’s latest efforts to restore order as it works with Moelis & Co. to seek a lifeline from lenders and with AlixPartners LLP to advise on “liquidity management and operational measures.”

Plunging Value

Christo Wiese has seen his net worth plunge by more than $2 billion since the scandal deepened last week, marking an abrupt reversal to one of South Africa’s most ambitious global business forays. Steinhoff shares, which have their primary listing in Frankfurt, fell 13 percent on Thursday before the resignations were disclosed. The company now has a market value of 2.43 billion euros.

A Steinhoff International Holdings NV logo sits on display outside the company’s offices in Stellenbosch. Photographer: Waldo Swiegers/Bloomberg

Banks that provided funding to an entity controlled by Wiese have sold 98.4 million Steinhoff shares, exercising their security rights over the stock, the company said in a separate statement Thursday. The company didn’t name the lenders.

The elder Wiese built up clothing seller Pepkor in South Africa over several decades, expanding it into Africa’s biggest retailer. In 2014 he sold it to Steinhoff, a furniture chain run by Jooste. The combined companies then accelerated their international expansion with acquisitions in Europe and the U.S.

Now, in a fight for survival, the company has put 1 billion euros in noncore assets up for sale, and it has said it’s examining the “validity and recoverability” of another 6 billion euros worth of assets. 


Steinhoff – Changes to the Supervisory Board, Steinhoff International Holdings N.V. (the “Company”)

The Company is providing the following update further to its announcement dated 8 December 2018.

Dr Christo Wiese, Chairman of the Supervisory Board and Delegated Supervisory Chairman today offered to resign from the Supervisory Board.

Dr Wiese made this offer in order to reinforce the independent governance of the Company of which he is a major shareholder. The Supervisory Board, on the advice of the independent committee of the Supervisory Board, has accepted his resignation to address any possible conflict of interest that may exist. Dr Wiese has offered to provide any ongoing assistance that may be required by the Company.

The Supervisory Board would like to use this opportunity to thank Dr Wiese for his contribution to the Company and wish him well in his future endeavours.

Ms Heather Sonn, a member of the Supervisory Board and its independent sub-committee, has agreed to assume the position of acting Chairperson. Ms Sonn will remain a member of the independent committee together with the other two members, Johan van Zyl and Dr Steve Booysen.

In addition, given the family relationship, Mr Jacob Wiese has also offered his resignation which has been accepted. The Supervisory Board acknowledges Mr Wiese’s contribution to the Company and his offer of ongoing assistance. Shareholders and other investors in the company are advised to exercise caution when dealing in the securities of the group.

Stellenbosch

14 December 2017

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