Steinhoff International Holdings may have about €15bn of assets and stakes in profitable companies such as Pepkor Holdings, but you will not see that reflected in the share price.
That is even after Steinhoff agreed on a much-delayed debt restructuring plan last week. There is one main reason for that: litigation. Steinhoff has highlighted a lengthy list of lawsuits as a significant threat to its ability to operate as a going concern. “The problem is the litigation hanging over Steinhoff – it is just astronomical,” Cratos Capital analyst Ron Klipin said. Even if the company is able to settle the claims favourably, “there’s still the time attached to these claims — it can take the next three, five, or even 10 years,” he said.
Any potential payouts have not yet been provided for as the company is still assessing their validity. Steinhoff has also initiated litigation of its own, including against former CEO Markus Jooste and an entity called Top Global.