Steinhoff hits 87c; Shoprite falls; Gwede on Eskom, Unions; IMF scare to spur action; Copyright Bill backlash


By Linda van Tilburg

  • Steinhoff shares hit a new low even after a long-awaited restructuring agreement on €9bn of debt had been reached. The company’s stock fell by 5.5% to 6 euro cents in Frankfurt, where Steinhoff has its primary listing. On the Johannesburg Stock Exchange, the shares traded at a new all-time low of R0.87 before closing more than 5% weaker at R0.94. Attention is now turning more fully to a slew of lawsuits facing the company including a claim for about R59bn from former chairman and ex-largest shareholder Christo Wiese. As part of the restructuring deal, Steinhoff doesn’t have to pay principal and interest on its debt until December 2021.
  • Shoprite shares fell to its worst level in three years after Africa’s largest food retailer cut its full year dividend by more than a third, as losses in the rest of Africa impinged on profits. The stock fell and ended the day at 9.2% lower on the JSE. The international supermarkets division made a full year trading loss of R265m. Shoprite Holdings says it will look to cut costs outside the South African market as it battles currency shortages and stricter regulation in several countries. The company’s CEO Pieter Engelbrecht told Bloomberg the currencies deteriorated further in the second half and they were looking at ways to curb costs and spending. Shoprite is considering delays in opening some of its new retail projects.
  • Other retailers were also battling on the day with Pick ‘n Pay dropping by 5.71%, Dischem by 4.25% and Pepkor and Woolworths falling by more than 3%. Gold miners were again the big winners on the day, with Gold Fields gaining more than 5% while the release of Harmony Gold’s full year results which indicated a decrease of 50% in loss per share, boosted its share price by 3.82% while AngloGold stocks were also up by more than 3%. The Rand traded at R15.36 at the close of day.
  • Energy Minister Gwede Mantashe says he sees unions backing Eskom’s rescue plan. Mantashe told Bloomberg in an interview that the unions are getting behind the plan to split the power utility into three units. The minister, who is a former secretary-general of the National Union of Mineworkers, said the unions will ultimately have to support the plan. Mantashe said Eskom must be redirected and managed properly; “if it fails it would be a disaster for South Africa.” He also revealed that the long awaited government energy blueprint will be present to Cabinet in the next two weeks. The minister also said nuclear plans, gas, hydro, solar and wind would be in the mix to replace ageing coal stations.
  • Rumours of an IMF bailout may force the South Africa government to push through reforms needed to rescue the economy. That is according to Thabi Leoka, an independent economist who says the IMF is used as a scare tactic to make the government aware that if they don’t implement the necessary policies, “we may be forced to turn to them.” Leoka said the problems are not insurmountable, the country knows what to do. The problem is lack of implementation and political will.” While the Government and the IMF have stated that a loan is not needed, South Africa’s biggest business lobby said the country may need to approach the IMF if they don’t act soon to fix the problems at Eskom.
  • The big global hitters of the film and television industry including Walt Disney Studios, Paramount Pictures, Sony Pictures and Warner Bros appealed to President Cyril Ramaphosa not to sign the Copyright Amendment Bill in its current form. According to Business Day, they said that the Bill if it becomes law would hamper international copyright as set out by the World Intellectual Property Organisation’s copyright treaty. The treaty aims to extend the coverage of copyright and the protection of IP to the internet and digital environment. The industry wants the Bill to be sent back for a proper, sector-specific impact assessment and meaningful consultation with affected stake holderss. Earlier the International Intellectual Property Association threatened that if the bill becomes law, the association would retaliate and lobby the US government to withdraw South Africa’s preferential trade status.