The parties in a high court application by minority shareholders in Lodestone – to try to prevent Markus Jooste‘s Mayfair and others from selling their shareholding in the company (Lodestone) – will likely meet next week in an attempt to agree on a date for the application to be heard, Fin24 reliably learnt on Friday.
The application is being brought against Second Chapter Investments (SCI), Lodestone Brands, Mayfair Holdings, Mayfair Speculators, Standard Bank and four others.
SCI is the majority shareholder in Lodestone (66.7%). SCI has two shareholders: Mayfair (78.37%) and SCI P1 (21.63%).
The minority shareholders allege that Mayfair is “in all likelihood scrambling to sell its shareholding in Lodestone through every means possible”.
The applicants regard the conduct of the respondents as “oppressive and unfairly prejudicial to the rights of the applicants” and want the court to interdict any further steps to dispose of their shareholding in Lodestone.
Gregory Senior, CEO of Mister Sweet, a division of Lodestone Brands, is gravely concerned that in August and October last year, the board of directors of Mayfair Speculators – among others, Stefan Potgieter (Jooste‘s son-in-law and then co-director) – declared a dividend to Mayfair Holdings of Mayfair Speculators‘ shareholding in Lodestone.
“It is unknown whether or not the board of directors of Mayfair Holdings and/or Mayfair Speculators knew, or ought to have known, about the accounting irregularities in Steinhoff,” reads Senior‘s supporting affidavit.
Senior added that Mayfair Speculators is a wholly owned subsidiary of Mayfair Holdings and its primary assets are, among others, the share portfolio held by SBG Securities in Steinhoff.
According to Senior, Mayfair Speculators owes Absa, Sanlam and Investec a total of about R1.3bn.
“What has been evident from the outset is that Mayfair Holdings holds the majority of assets, whereas Mayfair Speculators has the majority of debt,” said Senior.
“By declaring the dividend in specie to Mayfair Holdings, Mayfair Speculators effectively disposed of assets to the value of R1.5bn when Jooste was director.”
In Senior‘s view, it is “overwhelmingly probable” that Jooste and Potgieter were aware of the financial irregularities in Steinhoff and that these would be revealed in the near future – causing Steinhoff‘s shares to plummet, loans from the banks to become due, and Mayfair Speculators not to have sufficient liquidity to discharge these debts.
“Mayfair is clearly using its majority voting power through both its direct and indirect voting power in Lodestone to embark upon corporate action which is for its sole benefit,” claims Senior.
“All we are doing is seeking to ensure the longevity and optimal functioning of Lodestone…The competitive sale process opted for and embarked on by SCI, Mayfair and Lodestone quite evidently unfairly disregard the interest of the minority shareholders.”
In his view, the effect of this would be similar to the expropriation of the minority shareholding “at less than adequate consideration”.
This is regarded as being “burdensome and harsh” on all the minority shareholders, including the applicants, who wish to remain invested in Lodestone and continue with its management.
The applicants allege that such a sale process would “effectively strip” the minority shareholders of their shareholding at a value which is significantly lower than any future value envisaged at the time of approval by the board of directors of Lodestone‘s five-year strategic plan, and only benefit Mayfair‘s and SCI‘s “cause”.
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