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Around R5.50/Steinhoff share expected in shareholder settlement



“How much can I recover from my Steinhoff losses in the current process?”

This is a question we’ve heard many times over the past few weeks, but haven’t seen anyone answer yet.

The main reason for this is that no one really knows.

We’ve read a lot of the legal jargon on the Steinhoff website and most of the articles written about it, but no one has been brave enough to post some, including Steinhoff himself – and for good reason.

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Such an article can quickly degenerate into legalese and attempts to explain complicated cobwebs, so let’s formulate our understanding of the problem as clearly and clearly as possible (this is full of estimates and margin figures, and we emphasize that all our postulations have caveats).

There is approximately €750 million (approximately R13.5 billion) to be shared between the secondary/retail investors who are claiming – including recoveries from Deloitte and the directors and officers (D&O) insurers. This is a fixed amount. To put it in context, Steinhoff had a market cap of about R300 billion at its peak.

Of the 4.3 billion shares outstanding, approximately 68% of these shares fall into this retail pot. So about 2.9 billion shares can be claimed and this will be distributed to those who claim. So let’s estimate that 2.5 billion stocks are filing claims. Then this means that the simplest margin per share is R5.50 (R13.5 billion/2.5 billion).

It’s not nearly that simple, though, and your claim could be materially on either side of that number.

Shareholders who held Steinhoff shares on December 6, 2017 can claim and must file all of their purchases and sales for many years to do so. There is a complex equation and set of rules, which then determine your claim amount. This has been outsourced by Steinhoff to the Steinhoff Recovery Foundation (SRF), an independent body established to oversee the claim process, and Steinhoff plays no further role in this calculation.

There is no way for investors to calculate their claim amount

It is not directly linked to your actual loss and part of the equation is how much the stock price had inflated at the time of your purchase or sale – this is estimated by an independent body (the SRF). The equation also takes into account all your purchases and sales. This appears to favor shareholders who bought Steinhoff shares later rather than earlier. Some estimates of claim collection are in the neighborhood of 10% – but someone else will calculate your claim amount and the man in the street won’t be able to do it.

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So for those shareholders who bought many years before the shenanigans started, the result could be disappointing. However, for shareholders who bought in the year prior to that fateful announcement, the claim amount may be greater than expected. A thumb-suck of what shareholders might get is in the region of R2 to R8/share (with an average of R5.50/share), depending on individual circumstances and several other complex factors.

These figures have not been confirmed by Steinhoff, but are our best estimate based on our estimate of what we know.

We suspect the algorithm could be spitting out settlement amounts that people might want to challenge. These numbers are more than we expected at the time of the company’s woes, and Steinhoff’s management has done an incredible job of preserving and distributing value among the parties that have suffered losses.

It goes without saying that we have in no way attempted to cover all relevant issues in this article. Our intention is simply to provide some margin numbers to guide expectations, but given the complexity, only the outcome will provide ultimate clarity.

We help our clients make claims and the bottom line is that it seems worth claiming – the result is likely material enough to justify the effort.

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