Steinhoff of South Africa offers $1 bln to settle global lawsuits

Steinhoff of South Africa offers $1 bln to settle global lawsuits.

Steinhoff of South Africa offers $1 bln to settle global lawsuits
Steinhoff Chief Executive Officer Louis du Preez

Steinhoff of South Africa has proposed to pay around $1 billion to settle outstanding legal claims following a massive accounting fraud, a fraction of the over 9 billion euros ($10.5 billion) claimants are seeking.

This announcement on Monday drove its shares up over 11%.

The retailer has faced stream of lawsuits after revealing holes in its accounts in December 2017, the first sign of the fraud estimated to total $7 billion, and is still battling to recover.

Louis du Preez, Chief Executive said the company had been working for 12 months to put together the settlement, which will cover cases from the Netherlands to South Africa, and urged all claimants to support it.

“Although there is no certainty yet that we will be able to conclude this settlement, in our view these terms are firmly in the best interests of all stakeholders,” he said in a statement.

While regulators, creditors and claimants still need to approve the proposal, if accepted the settlement would remove a huge question mark over the struggling company’s survival.

If required to pay more than 90 separate legal claims against it in full, the firm would have to liquidate, it said, damaging the prospects of claimants getting paid and marking the end of what was once a prize South African company.

VEB, Dutch shareholder group said it will publish its response to the proposal after trading hours close in the Netherlands.

Other claimants, including Christo Wiese, South African businessman did not immediately respond to requests for comment, while some could not be reached.

Totalling around $1 billion altogether with separate sums offered for different groups of claimants, the settlement covers only a fraction of the value of the claims following the scandal.

The value of the claims following the scandal stood at over 9 billion euros in 2019, according to Steinhoff’s annual report. Some claims would not be covered by the settlement, Steinhoff said.

Shares in South African retailer Pepkor, a Steinhoff subsidiary and cash would be used to pay the value.

 

Source: Reuters