Former Tekkie Town CEO Bernard Mostert unpacks the Western Cape High Court’s decision to grant Steinhoff leave to appeal to the Supreme Court of Appeal in the liquidation bid it is facing. Mostert and business partner Braam van Huyssteen are fighting for the restoration of their business Tekkie Town after the footwear retailer was sold to Steinhoff in 2016 for R3.2bn. Mostert and Van Huyssteen received Steinhoff shares in exchange for Tekkie Town. Months later these were worth a fraction of their value at the time of the transaction, given Markus Jooste sudden resignation and subsequent accounting irregularities that came to light at the end of 2017. If the Tekkie Town owners are successful in the liquidation bid against Steinhoff, shareholders will almost certainly be left with nothing. – Justin Rowe-Roberts
On the decision by Judge Hayley Slingers:
Today, in the Western Cape High Court, Judge Hayley Slingers ruled that she will extend leave to appeal to Steinhoff and a group of alleged financial creditors – as she referred to them – to appeal to the Supreme Court of Appeal (SCA) ruling that a South African court does have the jurisdiction to wind up an external company, a company that is operating in South Africa but registered abroad. So, we are heading to Bloemfontein.
On whether Steinhoff is any closer to being liquidated:
No, not yet. We haven’t even got to the merits of whether Steinhoff is solvent or insolvent. It has been a four- or five-month skirmish over this jurisdictional issue, and Steinhoff and others have attempted many times – to a point where it was called an abusive process in the courts – to convince her that her original ruling was not correct. It’s set a large number of legal precedents, which is interesting and I think it will benefit South African society going forward. For us, it’s part of the process and we always knew our case in its entirety will visit South Africa’s highest court. You know, so this is another step in that journey.
On what happens next:
We will wait for the SCA to confirm that it will indeed hear the appeal. Once that appeal is heard, it’s either the end of the matter or the matter progresses and we deal with the issue of Steinhoff’s solvency or insolvency. Further to that, there’s obviously still two cases going on. There’s a challenge through the South African Reserve Bank in terms of the approval that was granted to Steinhoff in 2015 to leave South African shores. It’s an interesting process. It’s very intriguing. Then there’s the South African leg of the settlement – which faces a large number of headwinds with quite a lot of challenges – being heard in January of next year.
On Steinhoff’s equity value:
Well, if you think about it, our mutual friend Piet Viljoen would have been a good addition to this conversation, although I don’t believe he would have gone there because he is an investor. Personally, I would submit the Steinhoff bonds are trading below par. That alone is an indication there is no equity value in the company and that even the bondholders accept they won’t receive 100 cents in the rand ultimately. I don’t think anybody who is buying Steinhoff shares at the moment, will buy it on any grounds of value to be had down the line.
On who is benefiting the most from the process:
I think the people who stand to benefit the most are not the lawyers. It’s the debt holders who bought the debt for cheap after the fraud was revealed. They stand to make multiples on their money. Judge Slingers [mentioned] this in her ruling today, [when] she referred to them as alleged creditors because they have not proven they actually have a claim. Now, that’s interesting because if this liquidation continues as it likely will, those financial creditors might end up with no claim at all. Then you have a situation where there’s a lot more money to go around for those who have been defrauded and who’re not looking to restore their businesses like us. You talk about people on the street, the Public Investment Corporation (PIC), etc. If you challenge the validity of €11bn worth of debt and you think about a R280bn collapse, the man on the street arguably can do a lot better if we ventilate these issues fully and transparently.
Read also:
- The Great Steinhoff settlement debate – Piet Viljoen and Bernard Mostert
- “I’m skeptical on Steinhoff but I’m optimistic on SA” – Tekkie Town’s Bernard Mostert
- ‘Ultimately, we want the restoration of our business from Steinhoff’ – Tekkie Town’s Bernard Mostert
