Christo Wiese sues Steinhoff for £3.4 billion

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Steinhoff International Holdings’ ex-chairman Christo Wiese is suing the retailer for ZAR 59 billion (£3.4 billion) for investments he made during 2015 and 2016 in the midst of the firms’ accounting scandal.

The claim, which could be the biggest in South African history, represents yet another setback for Steinhoff as it battles to stay afloat and keep more than 12,000 stores it operates in 30 countries open.

In the UK, Steinhoff operates Poundland, Harveys Furniture and Bensons for Beds.

The business came under fire in December 2017 when it revealed a EUR 2 billion (£1.74 billion) hole in its balance sheet.

It was then struck by having some of its credit facilities withdrawn or suspended as it also grappled with more than EUR 10 billion (£8.7 billion) in outstanding debt.

The news of the accounting irregularities in December wiped out ZAR 185 billion (£10.7 billion) of Steinhoff’s market value.

Executives are now in the process of putting together a plan to restructure EUR 10.4 billion euros (£9 billion) of debt, while an investigation into the full extent of financial wrongdoing uncovered in December is still months from completion.

Steinhoff has appointed PwC to look into its accounts, which will need to be restated going back to at least 2015.

Wiese is now making two legal claims, the first calls for the cancellation of an agreement whereby his investment company Titan Group took Steinhoff shares in exchange for Pepkor, much of which is now part of the spun-off Steinhoff Africa Retail Ltd.

His second claim relates to a further purchase of Steinhoff shares in 2016, which was to facilitate the acquisition of US bedding chain Mattress Firm.

Wiese was the biggest shareholder in Steinhoff when the company reported the hole in its accounts.

He described news of the irregularities as a “bolt from the blue” when questioned back in January.