Billionaire Christo Wiese has sued Steinhoff International Holdings for cash compensation of 59 billion rand ($4.8 billion) over investments he made prior to an accounting scandal that rocked the company in recent times.
Wiese is looking to obtain the value of the investments he made before the share price crashed amid the accounting scandal, his investment company Titan Group informed Blomberg.
The lawsuit comprises two legal claims. The first claim seeks the termination of a contract that involved Titan Group owning part of Steinhoff shares in place of Pepkor, which was owned by the investment company. The second claim relates to Titan Group’s injection of over R24-billion in capital into Steinhoff in 2016 to aid the retailer to meet its debt obligations at the time of its acquisition of Mattress Firm in the US. Wiese bought into Steinhoff when he sold his Pepkor Holdings Ltd., Africa’s biggest clothing chain, to the company for $5.7 billion in 2015. This saw to Steinhoff’s expansion in Europe, the U.S. and Australia.
While reacting to this development, Steinhoff in a statement noted that “the company will assess the claims and determine the appropriate course of action.”
On Thursday, following news that Wiese intended to sue Steinhoff, Mail & Guardian reported that the company’s share price fell by more than 13% to trade at R1.92 at market close. This is the first time the group’s shares have traded below R2.00.
Formerly a board member and biggest shareholder of Steinhoff, Wiese stepped down as the global conglomerate’s chair in mid-December 2017 after Steinhoff reported accounting irregularities that led to the abrupt resignation of the group’s former CEO Markus Jooste. The uncovered hole in its accounts affected the value of its stocks and sent shares crashing.
According to the Bloomberg Billionaires Index, Steinhoff stock has since crashed more than 95 percent, while Wiese’s wealth has plunged from more than $5 billion to $2.1 billion.