Steinhoff International Holdings N.V.

Some interested parties may regard the nondisclosure of Tekkie Town’s threatened legal action ahead of the placement of Star shares as an indication that the Steinhoff board is being less than forthright about its difficulties.

But generally the board has been forthright about the immensity of the problems. Consider the opening page of last week’s presentation to lenders. At the bottom of the page was the warning “… but the current position is fragile and the need for a solution in the short term is critical”.

On the same page in that presentation is the startling admission that Steinhoff’s Austrian companies, Steinhoff Europe and Steinhoff Finance Holdings, are vulnerable due to insolvency risk. Perhaps it should not be a startling admission given events of the past six months and given the recent announcement that Steinhoff Europe would not be paying any dividends to its preference shareholders. But it is startling in the context of a company that, as recently as 2016, was valued at R178bn.

Working out how the Austrian companies were allocated that value in the first place and how it then seems to have disappeared is no doubt at the heart of the work being done by PwC’s investigators.

The role of the Austrian firms seems to have been to link the scores of entities in the Steinhoff group in a totally incomprehensible manner. Assets and money poured in and out in a manner that now appears to have been designed to confuse not only regulators but even shareholders. It is likely that anyone who could track these movements would have known better than to invest in the group.

Perhaps legal action by Christo Wiese will reveal what his due diligence turned up on these entities given that the Austrian companies must have been instrumental in the acquisition of the Pepkor assets.

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