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On the back on one of the biggest corporate deals in South African history, Christo Wiese, independent non-executive director at Steinhoff and recent majority owner of Pepkor joined Alec Hogg on the CNBC Africa Power Lunch to answer to allegations made by the Sunday Times that Wiese purchased shares during a period that should have been closed. Hogg and Wiese have a frank conversation about the claims based on JSE regulations and the timeline of events leading to the sale. The Steinhoff Company Secretary’s explanation is added below the transcript.- LF
ALEC HOGG: Talking about world leaders, when it comes to entrepreneurship we have one who’s going to join us right now. This is after Steinhoff’s takeover of the Pepkor Group in a deal worth nearly R63bn. That happened last week. Christo Wiese, independent non-Executive Director of Steinhoff International and of course, the man whom (until last week) owned all (or pretty much most) of Pepkor joins us on the line. After being in the Sunday newspapers Christo, I’m sure you would agree with Warren Buffett that you should never do anything that would land you on the front page of a newspaper, which you’d be embarrassed to see. This story that we see in the Sunday Times, accusing you of buying shares when it should have been a closed period: I guess it must rankle a little.
CHRISTO WIESE: Well, firstly, I obviously agree with Warren Buffett that you shouldn’t do something. The fact is you first have to ask yourself the question ‘did I do something that could land me on the front page of a newspaper’. The answer to that is clearly, and I’ve said that unequivocally ‘no’. If you look at the facts, I think they speak for themselves but I’m not prepared to enter into a debate and something that sounds like a defence in the public media about it. I would simply ask people to look at the facts.
ALEC HOGG: Well, the ‘facts’ Christo, would be the rules of the JSE, which says (and we did discuss this at the opening of the program) that if you have price-sensitive information and if you’re worried that the confidentiality might be compromised in some way, then you issue a cautionary statement. In this case, clearly, the reaction of the share price shows that nobody knew about it. It was a surprise to everyone, so JSE rules…you seem to be on the right page.
CHRISTO WIESE: No, I don’t think so. With the greatest of respect, the issue of issuing a cautionary is one for Steinhoff to respond to and not for me. That’s something the company should deal with. I’m totally relaxed that they’ve obviously acted correctly. You are of course, at liberty to ask, but not to ask me. What I thought you were referring to is the fact that I bought shares. The facts there are very simple. Steinhoff published its annual results on September 10th. I then bought shares on September 10th on the announcement of the results. I wanted to buy shares before, but we were in several closed periods: firstly, Steinhoff’s capital raise and then obviously, publishing their annual results.
ALEC HOGG: I think that’s fully appreciated. What the question is and what people would like to know more about was ‘was this deal in gestation at the time that you were buying shares’.
CHRISTO WIESE: The answer to that is ‘no’. I don’t quite know what gestation means but the answer…. As I understand gestation, the answer is ‘no’. I have explained to people that there were four parties involved in this deal and they were interdependent. They all had to be satisfied – Steinhoff, Titan, Brait, and Pepkor management (who owns ten percent of the company). Nothing could happen unless those parties came to an agreement – all of them. At what stage it’s in gestation, I simply don’t know.
ALEC HOGG: Well, you were also quoted as saying you’ve been going back and forth for some years on this issue.
CHRISTO WIESE: Yes,
ALEC HOGG: So that’s, I guess what the difference is between gestation, consummation, and birth. When was the deal a ‘done deal’?
CHRISTO WIESE: That is what you people have to figure out – you, who see some sort of problem in this. Should I not have been buying Steinhoff shares a year ago, when I was buying? Was that overstepping the line?
ALEC HOGG: No. All we want to know (and we don’t see a problem in it)… In fact, in this one, I must assure you that we’re on your side.
CHRISTO WIESE: Thank you.
ALEC HOGG: What we want to know is when did you finally get together and say ‘okay, guys. I think we have a go here’?
CHRISTO WIESE: Over the weekend, before the deal was announced.
ALEC HOGG: That’s pretty quick.
CHRISTO WIESE: Yes, because as I explained to you, you can work that out. It’s a four-pronged deal so until the last minute, there was a very distinct possibility that nothing would happen.
ALEC HOGG: As far as the Steinhoff guys doing their purchases as well… It was also at that stage. You’d been talking about this for many years, so the deal might not have gone ahead.
CHRISTO WIESE: Sorry, I couldn’t pick up the first part of the question.
ALEC HOGG: The Steinhoff shareholders (and we’re talking to you now as a non-Executive Director of Steinhoff at the time): when they purchased their shares, there was nothing untoward in your opinion either.
CHRISTO WIESE: Absolutely nothing.
ALEC HOGG: Christo, just on a broader basis, from here, what happens to Brait? That’s the interesting point. We’ve seen that the market loves Brait. They love what you’ve done with it but after this deal, the Brait share price fell. Is it going to remain an entrepreneurial opportunity?
CHRISTO WIESE: Dealing with the falling in the Brait share price… Again, the record is clear. On this past Friday, the Brait share price closed at the same level it was at prior to the Brait cautionary announcement. It’s not as if the Brait share price has fallen – if you look at the total picture. It started running at the time of the announcement, people pushed it to R95.00 I think, and it dropped back to where it was at the time of issuing of the cautionary.
ALEC HOGG: Just a final point: I got an email this morning who said that Len Konar, the Chairman of Steinhoff told people at the races, which he likes going to over the weekend, that he’s been working on this for four months. Does that change your view?
CHRISTO WIESE: I’ve never met with Len to discuss any deal at all.
ALEC HOGG: Christo Wiese, one of South Africa’s great entrepreneurs.
At the Steinhoff AGM on Tuesday 2 December, Company Secretary Stehan Grobler explained: “A closed period terminated upon conclusion of a board meeting of the Company that was held on 9 September 2014. Thereafter, certain Steinhoff share transactions occurred involving Company directors. These transactions were published on SENS and were also concluded with the knowledge and approval of the board chairman and the company secretary.
“At that juncture, the Pepkor transaction was indeed not imminent, as suggested in some press reports – in fact, the hard bargaining that culminated in the final conclusion of the transaction was not underway as yet.
“The question as to whether Steinhoff should have issued a cautionary was continuously kept in mind by the small team of executives involved in evaluation and subsequently negotiating the Pepkor transactions. The fact of the matter is that there was at no material time a real risk that price sensitive information would become public knowledge.
“The board met for the first time on the Pepkor transaction on 17 November 2014. It was on that occasion that a mandate was furnished for the transaction to be concluded. Even at that juncture, there were a number of uncertainties that could have prevented the final conclusion of the deal. We had duly assessed the risk of a leakage of price sensitive information and were comfortable that no cautionary was required.”
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