Deloitte settles with Steinhoff shareholders


Deloitte settles with Steinhoff shareholders

Published Date: 2021-02-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

Deloitte settles with Steinhoff shareholders

The auditing firm has not in any way admitted liability for the losses incurred by Steinhoff and its stakeholders.

Steinhoff International has reached a deal with Deloitte that will see the global accounting firm pay more than R1.2 billion to settle with shareholders suing it for the accounting fraud that resulted in a precipitous decline in the retailer's share price more than three years ago. Deloitte was Steinhoff's external auditor at the time and had passed its accounts for a number of years before declining to sign off on them in December 2017 when it found a billion rand hole in the accounts.

In June 2018, Steinhoff shareholders sued Deloitte for damages in the Netherlands, saying it had seriously failed in its statutory task as auditor by missing glaring inaccuracies in the company's financial statements. Steinhoff replaced Deloitte with Mazars towards the end of 2019.

Deloitte's settlement comes on top of the $1 billion (R14.5 billion) payout Steinhoff proposed last July to settle with shareholders, as well as contractual claims from businesses that were sold to Steinhoff in return for shares in the retailer. It said Deloitte would make additional compensation available to certain claimants, including €55.34 million (R973 million) for those who had acquired shares in the market in exchange for certain waivers and releases. A further €15 million (R264 million) was offered for distribution to certain contractual claimants.

The company said that Deloitte did not in any way admit liability for the losses incurred by Steinhoff and its stakeholders as a result of the accounting irregularities.

When it first announced its proposed settlement, Steinhoff said about 90 separate legal proceedings had been commenced against it and its subsidiaries in the Netherlands, Germany and South Africa. While all the claimants hadn't yet quantified their alleged damages, the combined claims of those that had came to more than R136 billion. If all claims against it were successful at the amounts demanded, it said its net asset value would fall far short of the amount required to satisfy them in full, which would result in liquidation proceedings. It said that would materially impair the value of assets available for distribution and adversely affect the timing and amount of the claimants' recoveries relative to the proposed settlement. It proposed paying the different groups of claimants 50% in cash, with the balance in shares of subsidiary Pepkor Holdings.

Steinhoff said it had also reached a deal with US company Conservatorium Holdings, which had applied to appoint a restructuring expert to its holding company. Following constructive engagements, it said Conservatorium and certain entities linked to former chairman Christo Wiese had withdrawn the application.

The company's shares rose 23% to R2.74 yesterday.

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