May 24, 2019
Steinhoff to face shareholder class action in Germany
May 24, 2019
Steinhoff will face a class action before a German regional court, dragging shares in the South African furniture retailer down by as much as 10 percent on Thursday, as the fallout from its billion-euro accounting scandal continues.
Steinhoff already faces around 6 billion euros ($6.68 billion) worth of legal claims following the fraud, which stunned investors that had bought into a story of a small South African outfit transformed into a discount furniture retailer straddling four continents.
A court in Frankfurt, where the company has a secondary stock-market listing, decided to bundle various cases brought by shareholders against the company and transfer them to a higher regional jurisdiction in the form of a class action, official documents published in Germany’s federal gazette on Wednesday showed.
Shareholders will ask German judges to state that Steinhoff’s balance sheets for 2013, 2014 and 2015 were incorrect in the hope of winning financial compensation for their losses.
A spokeswoman for Steinhoff, which delayed the publication of its 2017 and 2018 accounts following the scandal and has said irregularities could stretch back earlier than 2015, did not reply to requests for comment.
“I am convinced that we will be able to prove various violations of duties and help investors to win,” Maximilian Weiss, one of the lawyers representing shareholders said in a statement.
Steinhoff had failed in its duties to inform the public in a timely manner about the accounting irregularities, he continued, adding that other investors who had not yet brought their cases could now join the class action.
The company, which owns Mattress Firm Inc in the United States, the Fantastic chains in Australia and Conforama in France has been battling for survival since the scandal broke, wiping out shareholder equity and prompting numerous investigations and resignations of its senior leadership.
It has also pitted the company against its shareholders who blame the retailer for their losses, and sparked at least 10 material lawsuits against the company claiming around 6 billion euros in damages in total, according to its 2017 annual report published earlier this month, including a separate class action in the Netherlands.
The company also published its long-delayed results for 2017 earlier this month, reporting a $4 billion operating loss for the year. Its 2018 results are not expected until June.
Its shares fell by 10% in Johannesburg on Thursday before recovering to 1.35 rand per share - a 4.93% decline - by 1253 GMT. Its Frankfurt-listed shares were also down 5.6%.
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