A number of international law firms are racing to sign up Steinhoff [JSE:SNH] investors for class action suits, promoting themselves as the best vehicles for shareholders to claw back a portion of their losses.
Five legal companies, under the banner of the International Steinhoff Litigation Group, are in South Africa this week conducting roadshows in Cape Town and Johannesburg to retail and institutional investors; LHL Attorneys, Bynkershoek, TILP Litigation, DRRT and Therlum
At a meeting with retail investors in Illovo, Johannesburg, on Tuesday night, Maximilian Weiss of the German-based TILP Litigation was quick to point out that a rival class action suit planned by Dutch law firm BarentsKrans had not filed any legal papers yet against the global retailer.
In a press release in September, BarenKrants said that a number of the largest institutional investors in Steinhoff were consulting their clients about joining its suit, including Abax Investments, Allan Gray, Bateleur Capital, Coronation, Denker, Electus, Eskom, Investec, Momentum, Old Mutual and Sanlam.
Suing Steinhoff for the accounting irregularities which led to its December 2017 share price crash which has resulted over 90% of shareholder value being wiped out is a complex matter. Steinhoff's parent holding company, which includes 40 brands in 30 countries, is registered in the Netherlands and dual-listed on the Johannesburg and Frankfurt stock exchanges. It is headquartered in Stellenbosch.
The International Steinhoff Litigation Group, with law firms operating in all three countries, believes it is best placed to successfully sue Steinhoff as it has expertise, jurisdiction and filed papers in August against the global retailer in the South Gauteng High Court.
No cost to join class action
Weiss was unable to say which institutional investors the International Steinhoff Litigation Group had met with, but said they were using an opt -out class action route, which automatically includes all shareholders, unless they choose not to be part of the litigation.
He emphasised that there is no cost to joining the multi-jurisdiction legal case as it is being funded by a London firm, who will take a share of the winnings if successful. The lawyers will also be paid a success fee which is up to 25% of the winnings, and will be determined by the courts.
Weiss urged retail investors not to sign anything legally binding with other law firms, arguing that competing litigation could harm the prospects of a settlement as Steinhoff could go broke from multiple, separate claims. He added the class action will only work if Steinhoff and insurers are offered “peace” and an end to claims if they agree to settle.
Will not recover all losses
“I can assure you [you] will not recover all your losses, it’s impossible. But we want to be sure you recover as much as possible,” Weiss said.
The International Steinhoff Litigation Group has filed claims against 40 defendants including Steinhoff, Deloitte, Absa Bank, Standard Chartered Bank, Commerzbank and PSG Capital, as well as current and ex-directors of Steinhoff including former board chair Christo Wiese and former CEO Markus Jooste, and others. An analysis company is working on the figures they will be suing for.
Weiss added that they are also suing the institutions with “deep pockets” such as the banks who promoted Steinhoff and auditing firm Deloitte who signed off on the retail giants financial statements.
Dutch investor group VEB is also suing Steinhoff in Amsterdam in a separate suit on behalf of a number of shareholders. It agreed to suspend the litigation until April 2019, to give the company to compete its restructuring of its loan agreements.
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