After four years of litigation, the former owners of Tekkietown have reached a R1.2bn deal with Steinhoff, opening the way to a credible future for the massively defrauded business. Three weeks ago, before talks between the parties began, Steinhoff shares traded at 180c. Since news of the deal broke on Wednesday, the price has rocketed to 330c. Tens of thousands of retail investors and big creditors like billionaire Christo Wiese had a vested interest in the outcome of discussions that removes the major threat to a hard-fought settlement deal. In this fascinating podcast, Tekkietown’s former CEO explains the whys, whats and whens in conversation with BizNews.
Bernard Mostert on the R1.2bn Steinhoff settlement
Celebrating would be the wrong word, but gratitude and relief are appropriate terms, I feel. One of the reasons why we have litigated so aggressively over the last four years is that it was always a logical remedy for us to retain control of the business and take it forward.
But quite a lot of water has flowed into the sea and we have made headway with our litigation. In October this year, [we] looked at the business we started in 2018, which is now the FrontierCo Group. It really is a combination of the old House of Busby – which we took out of business rescue and the Mr Tekkie business that we started organically – and that business is doing very well.
For us, [we had to ask]: if we achieve a certain outcome and can leave our rearview mirror behind and focus only on that business, will that be a better outcome for us than if we litigate for another 3–5 years, get back control of the business and have to reintegrate that business because it would effectively be like an acquisition? Had we been successful with our litigation of restitution to the end?
To be honest, I don’t think we would have done better with reintegrating the business back into our structure; what the business will do now within the Pepkor stable and what we will do with our business and also as material shareholders in Pepkor.
On what they’re getting from Steinhoff
It is conditional on the settlement going ahead. The litigation, effectively, would really cease only once all those conditions have been met. I think that is covered in Steinhoff SENS. We are getting R500m in cash and then we’re getting 29.5 million Pepkor shares that we have to hold for the same period as any other claimant, at least 180 days after we receive the shares.
On the chief executive of Steinhoff
I have been very critical of Louis du Preez publicly. He and I have been critical of one another in court papers. But I must say we [have] never really had any conversation from the get-go. We were always recipients of information, but never parties to an engagement. I can only speculate as to why that is the case.
On what Steinhoff has tried to achieve with the settlement
With our conclusion that we want to focus on our new business, and starting to talk through a facilitated introduction directly to Louis and the broader Steinhoff team, [we] also got a good understanding of what they are trying to achieve.
I think one of the things which is true, is that the market purchase claimants – the man on the street – under South African legislation, would not have had a claim. Steinhoff has included them as somebody they would compensate.
There was an earlier court case, [in which] the judgment ruled the class action participants in South Africa don’t have a claim. If you look at that – and I think that’s a key development – Steinhoff has included that part in the settlement. It is good for the man on the street.
I also hope that legislation will change to allow people to recover from a crisis of this nature going forward. The conversations in the last two or three weeks have been interesting and I’m happy to give Louis credit for at least facilitating those conversations, even at a time when we were very aggressive towards one another.
Read more:
- Tekkie Town reaches settlement with Steinhoff
- Bernard Mostert on Steinhoff as court grants embroiled retailer leave to appeal
- Steinhoff-owned Mattress Firm files for US IPO
