South Africa: Steinhoff Shares Plunge After CEO, Marcus Jooste Quits

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Steinhoff International CEO Marcus Jooste has resigned on Tuesday, and the release of the company’s full-year results, which was originally scheduled for Wednesday, has been delayed indefinitely.

Jooste, who has been with Steinhoff sine 1988 and has been crucial in turning the company into Europe’s second-largest homeware retailer, will be replaced by the 76-year old business baron Christo Wiese

The CEO of recently unbundled Steinhoff African Retail (Star), Ben la Grange, has also resigned with immediate effect but will remain  with the company as a nonexecutive director on Star’s board.

Steinhoff”s share price crashed by 61% to R17.56 a little while after the JSE opened at 9am from Tuesday’s  R45.65 closing price. In Frankfurt, Steinhoff similarly crashed 52% to €1.42.

Star’s share price fell by 29% to R17.55 on Wednesday morning following the announcement of Jooste’s resignation.

The share price of KAP Industrial, the former manufacturing arm of Steinhoff, fell 14% to R7.45.

Steinhoff’s chairman, Christo Wiese, alongside former Pepkor CEO Pieter Erasmus, will act as head of Steinhoff until a new CEO is appointed.

La Grange was replaced by Star chief operating officer, Leon Lourens as CEO with immediate effect on Wednesday.

“The supervisory board of Steinhoff wishes to advise shareholders that new information has come to light today which relates to accounting irregularities requiring further investigation,” the statement said.

“The supervisory board, in consultation with the statutory auditors of the company, has approached PwC to perform an independent investigation.”

Jooste had tendered his resignation with immediate effect, and the board had accepted it, Tuesday night’s statement said.

Jooste, who had been with Steinhoff since 1988 and was CEO of Steinhoff International since 2000, was credited with growing the South African furniture manufacturer and retailer into Europe’s second-largest player, behind Ikea, via a string of acquisitions including France’s Conforama chain.

The group’s share price has fallen 18.2% from Friday’s closing price of R55.81 to R45.65 on Tuesday after warning shareholders on Monday its results would not be signed by its auditors.

“The supervisory board and the statutory auditors of the company have not yet finalised their review of certain matters and circumstances, most of which were raised by the criminal and tax investigation in Germany, as previously reported,” Monday’s statement said.

Steinhoff said on Tuesday its results for the year to end-September would be released “when it is in a position to do so”.

It warned shareholders it may have to restate past financial statements.

Jooste also resigned as a nonexecutive director of PSG Financial Services immediately, Theodore de Klerk was appointed as his replacement.

 

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