Steinhoff's Wiese Takes Billions in Losses as Stake Falls

(Bloomberg) -- Christo Wiese’s stake in Steinhoff International Holdings NV has been cut to about 6 percent after banks sold stock put up by the former chairman to secure margin loans, costing him billions of dollars in losses on the scandal-hit South African retailer.

The reduction in the shareholding from 20.52 percent was involuntary and he doesn’t know which lenders sold or who bought the stock, Wiese said in a phone interview Monday. That’s the last of the forced disposals, and he has no plans to sell down the stake further, the billionaire said.

Wiese has emerged as one of the biggest losers in a financial scandal that’s knocked almost 90 percent off Steinhoff’s market valuation, or more than 11 billion euros ($13.5 billion). The owner of Conforama in France and Mattress Firm in the U.S. said in early December it had uncovered accounting irregularities and that Chief Executive Officer Markus Jooste quit. He was followed less than two weeks later by Wiese.

Steinhoff's Wiese Takes Billions in Losses as Stake Falls

Wiese’s net worth has plunged to $2.1 billion from about $5 billion, according to the Bloomberg Billionaires Index. The scandal has also led to a fall in the value of a stake owned by the Public Investment Corp., a manager of South African state-worker pensions. Banks including JPMorgan Chase & Co. and Nomura Holdings Inc. have booked hundreds of millions of dollars of losses related to loans and the company’s share plunge.

Wiese, 76, became Steinhoff’s largest shareholder after agreeing to sell clothing chain Pepkor to the retailer in 2014, gaining about 20 percent of the company at 57 rand a share. Steinhoff closed at 55.81 rand on Dec. 1, the working day before it said it wouldn’t be able to file audited earnings. The stock traded 2 percent lower at 5.82 rand as of 1:16 p.m. in Johannesburg on Monday.

Pepkor still contains value, Wiese said. The bulk of that business is now part of Steinhoff Africa Retail Ltd., a company spun off by the parent company last year.

The PIC is seeking a review of South African company voting-pool arrangements and new regulations covering large personal shareholdings, representatives of the state-owned money manager said at a hearing with South African lawmakers on Jan. 31. The PIC also said it forced Wiese to resign from Steinhoff on Dec. 15, after the then-chairman had briefly held an executive role to replace Jooste.

The PIC’s stake is about 8 percent, according to data compiled by Bloomberg, meaning it’s leapfrogged Wiese to become Steinhoff’s largest shareholder. The money manager didn’t immediately respond to an email seeking comment.

Wiese was also at the parliamentary hearing, and said news of the scandal came to him as “a bolt from the blue” and that he had no prior knowledge of any wrongdoing. Jooste has been reported by Steinhoff to South Africa’s anti-corruption police unit and hasn’t commented or been seen publicly since the scandal broke.

Steinhoff's Wiese Takes Billions in Losses as Stake Falls

Steinhoff will have to restate its earnings for at least fiscal 2017, 2016 and 2015 and has hired PwC to investigate the accounting irregularities in more detail. In an emailed response to questions, the company said Wiese had notified the company of his share disposal, which was reported as 6.2 percent in filings he made to the Netherlands’ Authority for the Financial Markets on Friday.

Wiese said he’s currently holding 243,198,492 shares, which equates to a stake of about 5.7 percent, based on the amount of stock in issue.

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