The former chairman of Mattress Firm's South African parent company is looking to claw back nearly $5B in investments he made before an accounting scandal wrecked the conglomerate's share price value.
Christo Wiese, who became chairman in 2016, resigned his post in December following revelations that Steinhoff would have to restate earnings to at least as far back as 2015 as it may have inflated income and asset values, Bloomberg Markets reports. Steinhoff's former CEO Markus Jooste resigned last year as a result of the allegations, and company officials have reported him to South African anti-corruption police.
Steinhoff purchased Wiese's clothing chain Pepkor Holdings in 2015 for $5.7B while Steinhoff was on a tear acquiring retailers worldwide, including Houston-based Mattress Firm in 2016. In his lawsuit, Wiese is seeking to cancel the agreement in which his investment company Titan Group received Steinhoff shares in exchange for Pepkor.
“This is a strategy to get a seat at the table and improve his negotiating power significantly. It looks like he wants Pepkor back and is trying to sway it that way,” Cape Town-based Aeon Investment Management Chief Investment Officer Asief Mohamed told Bloomberg Markets. “He can argue that he lost more than all the other claimants together. This claim, if it’s valid, together with other class-action suits, technically means Steinhoff is insolvent.”
But South Africa news outlet Eyewitness News reports that Wiese, despite the lawsuit, said he is willing to work with other shareholders suing Steinhoff to ensure the company remains solvent. He also called for investigators to continue to probe Jooste and uncover who else may have aided him.
“We all have to wait for the auditor’s report but I think it would be fair to assume that it is highly unlikely that he would have acted entirely on his own,” Wiese told Eyewitness News.
The drama at Steinhoff coincides with a legal battle in the U.S. involving Mattress Firm, which has sued two former in-house real estate executives and a former executive with Colliers International in Atlanta for running an alleged fraud scheme to steer the retailer to high-priced real estate locations in exchange for kickbacks from developers.
Those being sued — principally former Colliers executive Alexander Deitch — have shot back, accusing the retailer's CEO, Steve Stagner, and former CEO Ken Murphy of having full knowledge of and condoning the real estate arrangements.
“Mattress Firm essentially weaponized the real estate department and its brokers to advance the larger agenda of removing all competition it could,” Deitch's attorneys wrote in the claim. “Mattress Firm’s aggressive roll-up was reckless, resulting in massive clustering of stores, assumption of bad locations which needed to be propped up, and astounding redundancies in certain markets.”
)
)
)
)
)
)
)
)
)
)
)
)