The world is changing fast and to keep up you need local knowledge with global context.
Meet Dr Marc Liebscher, the German White Knight riding to rescue of Steinhoff’s retail shareholders
Steinhoff’s management and board were given a bloody nose at December’s Annual General Meeting when all the important proposals were voted down because of the opposition of Germany’s leading Shareholder Protection association SdK. The investment activist body, established in the 1950s, boasts numerous coups including imploded multinational Wirecard. It speaks for shareholders representing 23% of Steinhoff’s equity – and board member Dr Marc Liebscher says it wants to add South Africans to the 1800 German shareholders who have already proved to be the Nemesis of Steinhoff’s managers. By voting against the proposals, SdK says it stopped a board proposal that would have seen already in-the-money financial speculators profiting further while shareholders would lose virtually everything. Berlin-based lawyer Liebscher says SdK is well-funded and up for a fight. Among its options is calling a meeting to replace the Steinhoff board and its well-paid (R50m a year) managers who, he believes, appear to be acting for hedge funds and other creditors rather than in the interests of shareholders. He spoke to Alec Hogg of BizNews.
Timestamps for the interview below:
- A brief background on Dr Marc Liebscher – 00:40
- On the Shareholder Protective association SdK – 01:10
- On SdK’s engagement and interaction with Steinhoff’s board of directors – 02:20
- On the rationale behind the strong bloc that got the AGM’s proposals voted down – 03:45
- On who was to benefit from the proposed idea of restructuring – 05:25
- On the fight against larger bodies – 07:15
- On how much the hedge funds stand to profit – 08:10
- On the valuations that Steinhoff put forward – 10:00
- On management lacking professionalism and stamina – 13:50
- On opposing the 20% that shareholders will own of an unlisted entity – 14:45
- On Steinhoff ‘not caring’ and going ahead with its proposal anyway – 16:25
- On using shareholder’s money to go to court – 17:45
Some extracts from the interview:
On the valuations that Steinhoff put forward
We had a closer look at the valuations that they put forward. They put forward a valuation by EY only in January, only after we opposed it and said, “Hey, we’re opposing.” And in January, they put forward a valuation that was so superficial. Only six, seven pages long, no granular data. EY said, “well, we have not audited the assets. We are just using the numbers and indications that the management board gave us. And according to these numbers and assumptions of the management board, the valuations are okay. And in addition, we are not liable for anything.” There were many lines for caveats and disclaimers. So it was clear to us that something is fishy with the valuation. If they come forward with such a superficial valuation, which only consisted of disclaimers. And then in addition, it was surprising. But are you surprised that they came forward with the restructuring plan only on the 15th of December? Steinhoff’s management said all through ’22, they said everything’s fine. The turnaround is going well. Shareholders shouldn’t be afraid of anything. We are running according to plan and suddenly they communicate: “Hey, the creditors want their money now. They are no longer willing to postpone the maturity” and they came forward with the restructure plan. This is the restructuring plan and we are going to vote on that restructuring plan within the minimum period of 42 days. All that was communicated on one day and before, for 12 months, they were communicating that everything was fine. So what happened? Suddenly, a complete absolute turnaround on the communications, on the merits, of what was going on in the company. And that was really a surprise. And you don’t do that. That’s really bad communication with the capital market. And that all added up to us for the assumption, hey, something fishy is going on here.
Read more: Steinhoff’s downfall: Ignoring strategic principles and the perils of asset intensity – Ted Black
On opposing the 20% that shareholders will own of an unlisted entity
It is 20%, but that would not even be shares. These 20% are some special types called CBR’s and they would be entitled to 20% of the surplus that the company makes in the following years. The other 80% of the surplus – the creditors would be entitled to. But these rights are not tangible, so you cannot trade in them. They don’t give you any voting rights in the company. So the creditors would be calling all the shots and then for sure we know what would happen. There never would be a surplus in the company because the creditors would have so much debt. The interest already is 10% payment in kind. So the interest is much too high. So in the end, what would happen is that the shareholders would have the impression that “well, we got 20% of these special rights but we cannot trade them, it doesn’t give us any voting rights and still the company is not making any money because the owners of the company, which are the creditors, would just get out any money they can.
Read more: Best of 2022: Shareholder demands forensic on TWK accounts after Jooste’s Steinhoff chum resurfaces as Audit Committee chair
On Steinhoff ‘not caring’ and going ahead with its proposal anyway
They’re going ahead with it anyway. We expected that. And now the fight goes on in a different forum. Last week it was the AGM. And now we’re moving into the Dutch courts and we’re looking forward to that. We have retained a very renowned Dutch law firm, very renowned US financial advisors, and we will fight the restructuring plans that they are now laying forward in the Dutch courts. It’s the so-called war proceedings. This is out-of-court proceedings according to a restructure plan that the management proposed to a Dutch court. And then the Dutch court will hear the different groups and stakeholders, and us as shareholders, and we will argue in the Dutch court that this restructuring plan that the management put forward is unfair to creditors because it assumes wrong valuation. The valuation of the company and the assets is much higher than laid down in the management’s restructuring plan.
Read more: Expensive chickens come home to roost – German regulator fines Steinhoff R190m
On using shareholder’s money to go to court
We should replace management. And regarding the money question, we are an NGO. So we are getting all the money from the shareholders. We have almost 1800 shareholders collected and they are supporting us. And very much our call goes out to the South African shareholders to get in the boat as well and to fight that restructuring plan. And the shareholders, all these shareholders gave a little money, not much money. It’s just €40-50 per paper per person. And with that money, we collect it. Do shareholders get more money? We have a warchest that is filled to the brim. And with that warchest we are paying our lawyers fees, we are paying the court fees, and we can very nicely fight what the management is putting forward and we will try to see if we can get in the driver’s seat.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.