Earlier preservation order for footwear retailer while other cases wind their way through the courts is overturned
Warren ThompsonTekkie Town. Picture: WALDO SWIEGERS/SUNDAY TIMESPepkor Holdings, the JSE-listed subsidiary of Steinhoff International, has won its appeal in the supreme court validating its right to dispose of discount footwear chain Tekkie Town, which it acquired from Steinhoff in 2017.
The judgment handed down by the Supreme Court of Appeal last Wednesday overturns an earlier decision made in the Western Cape High Court in April 2019, which prevented Steinhoff from selling shares in Pepkor in any way that would result in a loss of control of the company.
Pepkor was also prevented from selling Tekkie Town or encumbering it as part of a broader instruction to “preserve” the business while it remains the subject of a dispute. This also meant Tekkie Town was precluded from issuing shares. The motion was brought by Tekkie Town founder Braam van Huyssteen and other shareholders who sold their business to Steinhoff in 2016 in exchange for shares in the multinational furniture retailer and manufacturer.
As part of their main case still making its way through the courts, Van Huyssteen and company claim that Steinhoff fraudulently misrepresented the value of its shares when the sale agreement was concluded in 2016 with former Steinhoff CEO Markus Jooste.
As reparations for “having their business stolen from them”, Tekkie Town’s former shareholders either want their business returned to them or Steinhoff must compensate them in cash for the value of their stake in the apparel and footwear retailer at the time of the sale — which they say amounts to R1.854bn.
The motion to “preserve” the business was launched with the former remedy in mind.But the supreme court judges said there was no basis in law to grant such an order on the grounds advanced by Van Huyssteen and the other shareholders, and they overturned the original decision with costs.
One of the court’s main points in its decision is that Pepkor was not party to the original transaction.The second issue is that Van Huyssteen and the other shareholders had sold 56.94% of the shares in Tekkie Town to Steinhoff and did not own the business outright at the time of the sale. A private equity fund owned the balance. But the preservation order prevented Pepkor from selling any shares in Tekkie Town, a mismatch not equitable in law.
The original application and appeal decision may be academic since Pepkor has maintained from the beginning that it had no intention to dispose of the business and reiterated this yesterday.“Tekkie Town forms an integral part of the Pepkor group and Pepkor continues to make significant investment in Tekkie Town and its employees but welcomes the legal basis and principle that no restrictions should apply,” the group said in a statement on Monday.
Bernard Mostert, the former CEO of Tekkie Town speaking on behalf of the former Tekkie Town shareholders, said they would continue to pursue their claims against Steinhoff for the fraudulent misrepresentation. Read more: Business Day »
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