The JSE censured Pepkor and fined it R5m yesterday for failing to tell its shareholders that it stood surety for R15bn of Steinhoff International’s debt, and about its loans to senior management. Pepkor issued a separate statement saying it ‘has acknowledged that inadequate disclosures were made during the process of its listing and the publication of its annual financial statements in 2017’, notes a BusinessLIVE report.

The JSE said when the retail group – which recently changed its name to Pepkor from Steinhoff Africa Retail – issued its pre-listing statement on 4 September 2017, two weeks before its initial public offering, it failed to disclose a number of things required by the JSE’s rules.

The holding company of Pep Stores, the chain built by retail tycoon Christo Wiese, failed to tell investors it ‘formed part of a group of companies which unconditionally and irrevocably guaranteed the Steinhoff Services Ltd R15bn domestic medium-term note programme’.

Pepkor also failed to inform investors that it had given its directors and senior managers loans via an entity called Business Ventures Investments. The JSE said Pepkor had fully co-operated with the investigation and given ‘sufficient assurance that steps have been taken to address these breaches’.

Of the R5m fine, R1m is suspended for two years.

Full BusinessLIVE report

Any sale of Steinhoff’s shares in Pepkor is highly unlikely for the immediate future given that the Reserve Bank is set to block repatriation of funds to Europe, where Steinhoff is domiciled. Business Day reports this was the view expressed by Pepkor CEO Leon Lourens when asked about the possible reorganisation of Steinhoff’s assets that might result in the company selling down its 71% stake in Pepkor Holdings and sending the proceeds back to Europe.

Selling the company’s stake in Pepkor was one avenue being considered by Steinhoff, the market value of which has fallen nearly R200bn since accounting irregularities came to light in December 2017, in its bid to stave off bankruptcy. Lourens said the indications from Steinhoff are that there will be no sale of shares.

‘There has been an overhang in our share price because the market is expecting Steinhoff to sell its shares, but it will be very difficult for Steinhoff to externalise the funds, given Reserve Bank regulations, so we think there is almost a non-existent chance that Steinhoff will sell its shares for the foreseeable future,’ Lourens said, adding he was hopeful negotiations between Steinhoff and its creditors will bring certainty to the company’s structure over the term of the proposed agreements.

Full Business Day report