Christo Wiese stands by his words on margin call

Dr Christo Wiese contacted Moneyweb on Tuesday afternoon to explain his side of the story with respect to an article published that morning.

Wiese stands by his original response to Moneyweb’s questions, which is that he made no request for Steinhoff to cover a margin call in December 2017. “This is consistent with the statement provided by Steinhoff [included below] in which the company said that it ‘did not provide any funding to Wiese-related entities in December 2017’. The company could have added that I did not request any funding as well,” said Wiese.

Further, Wiese denies there was any confrontation between himself and fellow board members Dr Johan van Zyl, and Dr Steve Booysen, in the “chaotic days” that followed Markus Jooste’s resignation and the investigation by the company into accounting irregularities announced on December 6 2017.

Wiese says: “I had a cordial discussion with Steve Booysen. He told me the feeling on the board was that I, as the largest shareholder in the company, and who also has the largest claims against it, should resign from the supervisory board in order to avoid any conflicts of interest. I agreed to this request. There was simply no confrontation.”

According to the Sens statement published at the time, Wiese offered to step down “in order to reinforce the independent governance of the company of which he is a major shareholder”.

In reference to the “commercial agreements” entered into between Steinhoff and entities controlled by Wiese during October and November 2017 (that were alluded to in Steinhoff’s statement in response to questions by Moneyweb, which appear below), Wiese says these related to the proposed transaction that would see him vend his R25.5 billion stake in Shoprite in exchange for Steinhoff Africa Retail (Star) shares.

Statement by Steinhoff:

Steinhoff did not provide any funding to Wiese-related entities in December 2017. Entities within the Steinhoff group concluded commercial agreements in October and November 2017 with Wiese-related entities. These transactions did not follow the normal governance and disclosure processes of the company. Both of the transactions were investigated (under the control of the Independent Committee of the Supervisory Board) and subsequently repayment agreements have been concluded and are currently being implemented.

“This meant my Shoprite stake was going to be locked up for a period of time as the deal proceeded through various regulatory hoops,” says Wiese.

“At the time I wanted to reduce the overall levels of debt on my balance sheet, so I entered into an agreement with the management board of Steinhoff, led by Markus Jooste at the time, to forward sell a portion of the Star shares I would receive for my Shoprite shareholding. This was a commercial and legally-binding sale agreement. The proceeds would allow me to reduce my portion of the borrowings Upington and Titan had accrued in order to buy more Steinhoff shares,” he says.

The forward sale agreed to on October 15 amounted to the equivalent of €200 million (R2.9 billion).

A similar transaction – again involving Wiese forward selling the shares he would receive in Star – was entered into in November 2017. “In November, I asked for another amount of €125 million to be prepaid on the same basis. This was also to be used to reduce debt incurred on the original margin loan purchase of Steinhoff shares.”

The first transaction required and received South African Reserve Bank (Sarb) approval.

“But it is important to note, in both cases I dealt with the management board of the company, and they approached the Sarb when required and set the whole thing up. I believed that as a Dutch-domiciled company, Steinhoff’s management board had the authority to enter into these agreements and I thought this was normal procedure. There was nothing sinister about it. The procedures were, to the best of my knowledge, followed according to protocol. I had every reason to believe that the correct requisite internal approvals and governance matters in respect of the sale agreement and payments thereunder were complied with. So, I am not sure why the company has labelled the transactions as having not followed normal governance and disclosure processes,” says Wiese.

Ultimately, the events following December 6 meant that the deal to vend Shoprite into Star was cancelled. Wiese then entered into repayment agreements with an independent subcommittee of the board following his resignation as chairman. This was to repay the money he had received from Steinhoff for forward selling his Star shares, and a substantial portion has already been repaid.

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