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#41 DayTraderDad

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Posted 17 May 2019 - 11:59 AM

Just to put the Tekkie Town deal in perspective:

In 2014 Tekkie Town owners sold 42,5% share to Actis for R720 mil with 265 store making the full value R1,694. ( R6.1 mil per store)

Two year later Aug 2016 SNh buys Tekkie Town for R3,257 mil with 302 stores so Actis get 42.5% which is R1,384 mil which is a
profit of 52%. (10.7 mil per store)

So my question who evaluated Tekkie Town for SNH?

What happens if this was also part of MJ inflation program?? Can SNH claim money back.

Will Actis be willing to give back the R1,384 mil?

Any comments??
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#42 DayTraderDad

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Posted 17 May 2019 - 11:37 AM

Hi DTD,
 
CW's claim and the MF acquisitions are two separate matters, not to be conflated. 
 
The basis of CW's claim is that when he made his decision to sell Pepkor into Steinhoff, he was influenced by the fraudulent Steinhoff reported earnings. This is a legitimate claim which any of us in his circumstances would make.  It is up to the Courts to decide whether he should have know about the Steinhoff shenanigans.  Lawsuits are based on substantive and procedural platforms.  Substantively, possibly CW has a case.  It is the procedural side where he will fail.  SA law does not allow foreign registered listed companies to be sued in SA (accordingly to CIPC).
 
Regarding the MF acquisition.  Believe it or not, it is actually not illegal to be stupid or make silly decisions.  The annals of business are littered with companies making poor decisions.  Indeed, it is a core part of capitalism - having winners and losers, a process that separates the wheat from the chaff. Go read about Henry Ford going to build small town America in the Brazilian jungles so that he could get the advantage with rubber.  That was a monumental error of judgement... which is not illegal. Same as MF.
 
The Courts will not consider the MF matter when they weigh up the veracity and strength of CW's lawsuit.
 
Best Regards
Captainfrom82


Hi Captain,

Thank you yes I agree and understand there are two distinct issues and indeed its the courts that decide but I was comparing
that he is claiming E3.2 bil (there about) but while he was driving the ship he destroyed E3.3 bil (the total impairment of the business
he agreed to buy as chairman a year before) so in my books he actually still owes SNH E0,1 bil.
For me the standard of the due diligence as in the media 5 days, pay 116% above share price on a stock that was heavily shorted and not
showing rental commitments surely the standard of due diligence is in question.
So what needs to happen shareholders must sue for reckless trading I don't know if that is possible.
Who had the final say for the purchase of the MF?
Anyway I just hope all come together and simply give SNH management time to carry out the repairs and make the company strong again.

Regards,
DTD
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#43 Captainfrom82

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Posted 17 May 2019 - 10:56 AM

Good post Bubble all I can add is I would be very happy for Pepkor to reverse the deal of Tekkie Town because SNH paid too much for it but with
one condition the full deal to be reversed and the cash paid back that was given to UK private Equity firm Actis.

Actis paid $65 mil for 42.5% two years before SNH bought it. read this article:
https://sasportstrad...t-of-steinhoff/

The CW claim as one reads more articles not so sure he will be very successful MF deal brought SNH to its knees just see how much was impaired
so he was the big boss then thus should take full responsibility for that crazy deal.

 

Hi DTD,

 

CW's claim and the MF acquisitions are two separate matters, not to be conflated. 

 

The basis of CW's claim is that when he made his decision to sell Pepkor into Steinhoff, he was influenced by the fraudulent Steinhoff reported earnings. This is a legitimate claim which any of us in his circumstances would make.  It is up to the Courts to decide whether he should have know about the Steinhoff shenanigans.  Lawsuits are based on substantive and procedural platforms.  Substantively, possibly CW has a case.  It is the procedural side where he will fail.  SA law does not allow foreign registered listed companies to be sued in SA (accordingly to CIPC).

 

Regarding the MF acquisition.  Believe it or not, it is actually not illegal to be stupid or make silly decisions.  The annals of business are littered with companies making poor decisions.  Indeed, it is a core part of capitalism - having winners and losers, a process that separates the wheat from the chaff. Go read about Henry Ford going to build small town America in the Brazilian jungles so that he could get the advantage with rubber.  That was a monumental error of judgement... which is not illegal. Same as MF.

 

The Courts will not consider the MF matter when they weigh up the veracity and strength of CW's lawsuit.

 

Best Regards

Captainfrom82


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#44 DayTraderDad

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Posted 17 May 2019 - 10:37 AM

Its possible - almost anything is possible, but how likely?  .  Put yourself in the mind of a lender.  Why would you want to acquire Pepkor Africa for around R17 per share, when you already own 71% of Pepkor through your "ownership" of Steinhoff at a deeply discounted price.  Besides, Any value that Pepkor offers will flow anyway to the lenders in any event.
 
The big lenders will also fear the exact same issue as what Steinhoff has regarding foreign capital in SA. 
 
They swop their external US$ or Euro denominated debt to buy ZAR assets in a country that the Reserve Bank is finicky about money going out?
 
Why would they do that?
 
Regards
Captainfrom82


Haha good point I did not look it that way. So I guess the way forward is keep head-down fix the business and everybody will profit!!
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#45 DayTraderDad

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Posted 17 May 2019 - 10:35 AM

JP Verster(Market commentator, and shorted SNH way back when) said the same thing. He called it a "Zombie" company. He said the main reason for SNH to fail is their ability to move funds from SA and East EU to Central EU.
 
Besides SARB blocking the movement, he felt that the pending litigation will be a bigger problem. SNH cannot sell Pepkor due to Wiese/TekkieT claim. (Is there merit in this statement? - I think so, hence CW trying to block them with his own claim and not part of VEB setup)
 
SARB will be even less inclined to allow move since they selling Unitrans, already secures the jobs. They do not care about the SNH HQ in Stellenbosch, but they should care about PIC investment.
 
Another peculiar position.
 
Your views,


Good post Bubble all I can add is I would be very happy for Pepkor to reverse the deal of Tekkie Town because SNH paid too much for it but with
one condition the full deal to be reversed and the cash paid back that was given to UK private Equity firm Actis.

Actis paid $65 mil for 42.5% two years before SNH bought it. read this article:
https://sasportstrad...t-of-steinhoff/

The CW claim as one reads more articles not so sure he will be very successful MF deal brought SNH to its knees just see how much was impaired
so he was the big boss then thus should take full responsibility for that crazy deal.
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#46 Captainfrom82

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Posted 17 May 2019 - 10:20 AM

Thanks Captain yes I agree SNH has been told that SARB will not approve the money leaving.
What about swooping debt for shares would that be as possibility?

 

Its possible - almost anything is possible, but how likely?  .  Put yourself in the mind of a lender.  Why would you want to acquire Pepkor Africa for around R17 per share, when you already own 71% of Pepkor through your "ownership" of Steinhoff at a deeply discounted price.  Besides, Any value that Pepkor offers will flow anyway to the lenders in any event.

 

The big lenders will also fear the exact same issue as what Steinhoff has regarding foreign capital in SA. 

 

They swop their external US$ or Euro denominated debt to buy ZAR assets in a country that the Reserve Bank is finicky about money going out?

 

Why would they do that?

 

Regards

Captainfrom82


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#47 Bubble

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Posted 17 May 2019 - 10:12 AM

Hey DTD,

 

I think that I had posted on this previously.  This is definitely a distinct possibility and has been factored into the restructuring plan (as a possibility).

 

There is documents to this effect that I have come across.  Selling the stake is of course possible, but then what?  Steinhoff would need to take those proceeds out of the country presumable to pair debt.  Otherwise the sale in one of their two most profitable businesses would be pointless.

 

The biggest hurdle therefore would be the South African Reserve Bank approval would be needed to expatriate the funds overseas.

 

You can make up your own mind on what the SARB position would be given South Africa's critical financial position.

 

Best Regards

Captainfrom82

 

JP Verster(Market commentator, and shorted SNH way back when) said the same thing. He called it a "Zombie" company. He said the main reason for SNH to fail is their ability to move funds from SA and East EU to Central EU.

 

Besides SARB blocking the movement, he felt that the pending litigation will be a bigger problem. SNH cannot sell Pepkor due to Wiese/TekkieT claim. (Is there merit in this statement? - I think so, hence CW trying to block them with his own claim and not part of VEB setup)

 

SARB will be even less inclined to allow move since they selling Unitrans, already secures the jobs. They do not care about the SNH HQ in Stellenbosch, but they should care about PIC investment.

 

Another peculiar position.

 

Your views,


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#48 Captainfrom82

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Posted 17 May 2019 - 10:10 AM

Hi DTD,

 

I'm not sure if MF has all this debt, so I think the debt will still remain in the Holdings books. So I'm not sure what impact it will have on the NAV.

 

Regarding your impairment question. So Steinhoff overpaid for buying MF. Thus they impaired all of that goodwill. Won't have an effect on deconsolidation. Interesting question however will be at what value they will book in MF as an investment in associates. Are they gonna use book value? Free cash flow valuation? Or at cost? 

 

I spoke to someone really experienced in investing regarding Steinhoff and he told me that I shouldn't forget that PWC was appointed to help restructure the company. Now imagine PWC fails to do this what bad reputation would that give to PwC for future projects? Secondly all board members would lose their jobs and reputation. Again I think they will do and have done their best to get this company running again. 

 

Following the 1H results released on 29 June 2018, VEB wrote to Steinhoff seeking clarity on a number of things, most of which we have discussed here. 

 

But interestingly, in VEB's letter they have specifically asked how was it possible to have bought MF in 2016 (start of FY17) and then impair this by E1.5b (which was the impairments noted on the 1H results).

 

You may also recall that DTD and I asked this question again when MF was further impaired for the FY17 results to almost zero Goodwill.

 

It would be interesting to get the view/feedback of an actual VEB litigant shareholder?  Is there anyone on Sharechat who is part of the VEB lawsuit?

 

Best Regards

Captainfrom82


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#49 DayTraderDad

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Posted 17 May 2019 - 10:08 AM

Hey DTD,
 
Not commenting on the revenue number which is interesting...
 
EBITDA of E507m on Revenue of E7050m equates to an EBITDA margin of 7.2%
 
Its not going to happen buddy.  Steinhoff's actual EBITDA margins for 2017 and 2018 was 4.1% and 3.6%
 
You can see where I am going with this?
 
 
Regards
Captainfrom82


Hi Captain,

The margins I calculated from the H1 2018 which are the most recent see the table below:

Unit Revenue Margin EBITDA
Pepkor Europe 1980 8.40% 167
Other 440 4.50% 20
Pepkor SA 2396 9.00% 216
Conforama 1530 4.50% 68
Greenlit 704 5.20% 36
Total 7050 507

What you think?

I also expecting a improvement going forward in the margins because the fat years are gone and the lean and mean time has arrived!!

Regards,
DTD
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#50 DayTraderDad

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Posted 17 May 2019 - 09:55 AM

Quite a while back I posted a link to Cabinet Maker about a article referring to the CVA.
I finally got the article and its old news is about the LSW issue before it was put aside.
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#51 Captainfrom82

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Posted 17 May 2019 - 09:51 AM

Total revenue for the 6 months E7050 mil and EBITDA E507 mil.

The figures do not include the following:
Property (I cannot get proper information on whats left after the Kika deal)
Automotive - As it has been sold thought to leave it not sure of the date of sale but if it is to be included then should be very similar to the H1 -2018

 

Hey DTD,

 

Not commenting on the revenue number which is interesting...

 

EBITDA of E507m on Revenue of E7050m equates to an EBITDA margin of 7.2%

 

Its not going to happen buddy.  Steinhoff's actual EBITDA margins for 2017 and 2018 was 4.1% and 3.6%

 

You can see where I am going with this?

 

 

Regards

Captainfrom82


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#52 DayTraderDad

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Posted 17 May 2019 - 09:49 AM

Report: Tempur Sealy, Matt Firm likely to strike deal in ‘next few months’


https://www.furnitur...ext-few-months/

Highlight:

"Wedbush, which hosted meetings for investors with senior Tempur Sealy officials, including Scott Thompson, CEO, shared its observations in a report. “We reiterate our prior analysis that a deal with Mattress Firm will likely occur within the next few months,” the report said."
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#53 andi222

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Posted 17 May 2019 - 09:49 AM

Hi Andi222,

 

The EBITDA of E750 that you projected in FY18 would need revenue of between E18 326 and E19 403   Compare that to the FY17 actual revenue of E18 818 when Steinhoff had their full suit of subsidiaries.  I think that numbers for 2018 revenue above E17000 are optimistic.

 

The other variable of course is that Steinhoff have increased their EBITDA margin, something that they did not manage to do from 1H17 to 1H18 (this hovered between 3.8% to approximately 4.2%).

 

You thoughts?

 

Best Regards

Captainfrom82

 

Hi Captain,

 

So I think revenue will come in between 17 and 17.5 billion. For 9 months they already reported close to 13 billion (Actual figures)

 

My sustainable EBITDA I see between 700 and 750 million. Remember this excludes professional fees impairments etc. HJ 1 2018 Actual figures are 340 Million. So just a small inprovement which I think they have made would bring the sustainable EBITDA into my range. 

 

I think their turnaround plan has started to show signs of improvement from the second half of 2018. Look at MF figures and Pepkor figures. 

 

But I guess we will have to wait and see haha.


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#54 DayTraderDad

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Posted 17 May 2019 - 09:46 AM

Hey DTD,
 
I think that I had posted on this previously.  This is definitely a distinct possibility and has been factored into the restructuring plan (as a possibility).
 
There is documents to this effect that I have come across.  Selling the stake is of course possible, but then what?  Steinhoff would need to take those proceeds out of the country presumable to pair debt.  Otherwise the sale in one of their two most profitable businesses would be pointless.
 
The biggest hurdle therefore would be the South African Reserve Bank approval would be needed to expatriate the funds overseas.
 
You can make up your own mind on what the SARB position would be given South Africa's critical financial position.
 
Best Regards
Captainfrom82


Thanks Captain yes I agree SNH has been told that SARB will not approve the money leaving.
What about swooping debt for shares would that be as possibility?
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#55 DayTraderDad

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Posted 17 May 2019 - 09:43 AM

I picked this up from another site. There is some serious nibbling going on... Wonder what Peter Armitage will say about the buying going on??
 
 
Nedbank 27 Mil Shares and 
Allan Gray 23 Mil is not small numbers
 
https://www.ariva.de...4#jumppos179854


Thanks Chris well spotted. Interesting to see Coronation bought back in after saying that SNH is only loss making and they got out.
The volumes traded recently tells a story!!! I guess the big guy don't want to be caught naked when the tide goes out!! Hahaha
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#56 Captainfrom82

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Posted 17 May 2019 - 09:42 AM

Hi Andi,

This quote from latest fins:

The Management Board has considered the
shareholding and governance structures of
SUSHI and determined that the Group lost
control of SUSHI on 21 November 2018.
Subsequent to this date, Mattress Firm will
be accounted for as an equity accounted
investment in the Group’s 2019 annual
financial statements.

So in view of that will they consolidate 50% or there will be a equity value?

 

If I remember correctly, as per IFRS 10 Steinhoff would need to consolidate the revenue until 21 Nov 2018.  Thereafter the MF numbers would be treated via Equity Accounting as Steinhoff lost control (through the number of directors it appointed to the board being in the minority).

 

In teh Income Statement there will be a line item  "Share of Profit of Equity Accounted Companies".   The listed companies are accounted for first, (KAP (part of the year); PSG (various interest percentages as Steinhoff sold equity in PSG); SRP (until it was sold)), and then the unlisted companies Atterbury, Coffel, GT Global Trademarks, Habufa, POCO (until it was sold) and a few others that grouped as "other".

 

Best Regards

Captainfrom82


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#57 Captainfrom82

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Posted 17 May 2019 - 09:27 AM

Any one has some news has to why Pepkor SA - PPH id down 6.5%???

Could there be a book build coming up SNH selling to the 51%???

 

Hey DTD,

 

I think that I had posted on this previously.  This is definitely a distinct possibility and has been factored into the restructuring plan (as a possibility).

 

There is documents to this effect that I have come across.  Selling the stake is of course possible, but then what?  Steinhoff would need to take those proceeds out of the country presumable to pair debt.  Otherwise the sale in one of their two most profitable businesses would be pointless.

 

The biggest hurdle therefore would be the South African Reserve Bank approval would be needed to expatriate the funds overseas.

 

You can make up your own mind on what the SARB position would be given South Africa's critical financial position.

 

Best Regards

Captainfrom82


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#58 Captainfrom82

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Posted 17 May 2019 - 09:15 AM

Just wait for the Sealy deal. Watch the boost in revenues then. As mentioned before the EBITDA in 2019 should sit at 1.133 billion. 

 

We will however see a dip in 2018 figures unfortunately. I think the share price might drop again. My forecast that I calculated for 2018 I get an EBITDA of 750 million. People will come up with the same story that business is not profitable with the large debt burden. . . But these okes don't look into what management has achieved thus far. As soon as we see the HJ 2019 figures we will see a sustainable increase in the share price. 

 

So keep strong guys. 

 

PS. Captain, I'm still waiting for your EBITDA predictions. :)

 

Hi Andi222,

 

The EBITDA of E750 that you projected in FY18 would need revenue of between E18 326 and E19 403   Compare that to the FY17 actual revenue of E18 818 when Steinhoff had their full suit of subsidiaries.  I think that numbers for 2018 revenue above E17000 are optimistic.

 

The other variable of course is that Steinhoff have increased their EBITDA margin, something that they did not manage to do from 1H17 to 1H18 (this hovered between 3.8% to approximately 4.2%).

 

You thoughts?

 

Best Regards

Captainfrom82


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#59 andi222

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Posted 17 May 2019 - 09:12 AM

I picked this up from another site. There is some serious nibbling going on... Wonder what Peter Armitage will say about the buying going on??

 

 

Nedbank 27 Mil Shares and 

Allan Gray 23 Mil is not small numbers

 

https://www.ariva.de...4#jumppos179854

 

Hi Chris101,

 

thanks for the data. Yeah agreed I think the big guys are slowly realising that in the coming three years we will see a huge upswing in my opinion. All major subsidiary's make good profits in 2019. 

The major problem with this share is that there is no major shareholder. So too many shares are in free flow and there are too many short sellers making money here. However as soon as we have everything uncovered and 2018 AFS are out we will see a slow but steady rise in this share in my own opinion. I will top up a bit next month two weeks before AFS are gonna be released.


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#60 Chris101

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Posted 16 May 2019 - 10:26 PM

I picked this up from another site. There is some serious nibbling going on... Wonder what Peter Armitage will say about the buying going on??

 

 

Nedbank 27 Mil Shares and 

Allan Gray 23 Mil is not small numbers

 

https://www.ariva.de...4#jumppos179854

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