Christo Wiese has dedicated five decades to building a small chain of South African clothing stores in a multimillion-dollar retail empire spanning four continents, with the ambition to challenge the mighty Ikea in home furnishings. Now he is trying to prevent his creation from falling like a house of cards.
The 76-year-old billionaire intervened as interim CEO at Steinhoff International Holdings NV after his friend and colleague Afrikaaner Markus Jooste resigned amid an accounting scandal that wiped out more than $ 8 billion of the value on Wednesday. of the company's market, along with more than $ 1.4 billion of Wiese's personal fortune.
60% of Steinhoff Frankfurt's main listing has put an end to one of South Africa's most ambitious expansions abroad. . After taking retail chains ranging from Conforama in France to Bensons for Beds for Mattress Firm in the United States, the company can bid farewell to the negotiation, and Wiese faces a break in investor confidence.
"There are clearly more unknowns than known information related to the group's financial position and real operations," said Sean Ashton of Anchor Capital in a note. "It is clear that fraud remains a clear possibility."
Stocks plummeted after the company said late on Tuesday it discovered irregularities in its accounts and indefinitely delayed a financial report scheduled for Wednesday. Jooste, 56, resigned with immediate effect, ending a career of almost 20 years with the company. Wiese, the president, said he would lead Steinhoff for the time being.
Wiese began working at clothing vendor Pepkor in the sparsely populated North Cape of South Africa in the 1960s. By 2014, it had expanded to the largest retailer in Africa. It was then that he sold it to Steinhoff, a furniture chain run by Jooste. That company had its own colorful history, having started in then West Germany in the 1960s, selling cheap furniture made in the East Communist to negotiate hunters.
The Pepkor deal of $ 5.7 billion was the largest acquisition in South Africa in more than a decade, and saw Wiese become Steinhoff's largest shareholder. The company now has almost 20 billion euros ($ 23.6 billion) in annual sales.
"I thought that in terms of building a truly world-class discount retailer, the two companies would fit perfectly," he told Bloomberg News at the time. Steinhoff is "the kind of company that can really go places, they have carved a niche in the world where they play."
Wiese was true to his word. Steinhoff traveled to France and the United States to make offers for the Darty appliance chain and home appliance retailer Argos, respectively. Both offers finally failed, but Wiese and Jooste were not discouraged. Steinhoff succeeded with a focus for Poundland, the British discount chain, before crossing the Atlantic to clean the Mattress Firm in the US. UU
In September, Steinhoff quoted shares of its African retail subsidiary, focusing on the parent company in the global home. Furniture markets.
Wiese, who like Jooste did not respond to calls to his mobile phone, had already been hit by a series of financial setbacks before the fee falls on Wednesday. Your investment vehicle Brait SE in the United Kingdom has suffered since the vote to leave the European Union. New Look clothing chain, which Brait bought for around $ 1.2 billion, is now valued at zero.
Steinhoff's international debt also plummeted on Wednesday, with 800 million unsecured senior bonds maturing in 2025 that fell to 41 cents on the euro. to 42 cents, according to data compiled by Bloomberg.
After the agreement with Pepkor, Wiese invested an additional $ 1.8 billion in Steinhoff in September 2016, partially financing the agreement by committing shares to Citigroup Inc., Goldman Sachs Group Inc., HSBC Holdings Plc and Nomura International Plc. With the security price now lower than the value of the loan, you may need to transfer more shares as collateral.
Both Wiese and Jooste own properties in the picturesque wine country of Cape Town, along with other South African entrepreneurs, including Whitey Basson, who ran the retailer Shoprite Holdings Ltd. for 37 years until the beginning of this year.
Having lost his closest ally in Jooste, the billionaire has asked an old colleague to help solve the problem. Steinhoff hired Pieter Erasmus, former general manager of Pepkor, as an adviser.
Erasmus is a "proven lieutenant," said Syd Vianello, an independent retail analyst in Johannesburg. "Wiese has a huge amount of money at stake and it's convenient to ensure that the trust in the company is restored."
With a 19 percent stake in Steinhoff and 35 percent of Brait and 17 percent of Shoprite, Wiese remains a multi-millionaire, but his days of challenging Richemont's president, Johann Rupert, and the president of Anglo American Gold Investment, Nicky Oppenheimer, for being the best of South Africa's rich list, may have ended. Its net worth dropped 33 percent on Wednesday to only $ 2.9 billion, after having dropped about $ 1.2 billion since the Pep agreement.
– With the assistance of Tom Beardsworth, Karin Matussek and Renee Bonorchis