Pepkor fined R5m for misleading investors

Pepkor kept a R15bn loan guarantee to its parent, Steinhoff, along with loans to senior management hidden from shareholders

The JSE gave Pepkor a public censure and a R5m fine on Monday morning for failing to tell its shareholders that it stood surety for R15bn of Steinhoff International’s debt and about loans to senior management.

Pepkor issued a separate statement saying it “has acknowledged that inadequate disclosures were made during the process of its listing and the publication of its annual financial statements in 2017”.

The JSE said that when the retail group — which recently changed its name to Pepkor from Steinhoff Africa Retail (Star) — issued its pre-listing statement on September 4 2017, two weeks before its initial public offering (IPO), it failed to disclose a number of things required by the JSE’s rules.

The holding company of Pep Stores, the chain built by retail tycoon Christo Wiese, failed to tell investors it “formed part of a group of companies which unconditionally and irrevocably guaranteed the Steinhoff Services Ltd R15bn domestic medium-term note programme”.

Pepkor also failed to inform investors that it had given its directors and senior managers loans via an entity called Business Ventures Investments (BVI).

“The company, through its subsidiaries, was party to a guarantee of third-party debt related to BVI and exposure thereto equated to R440m as at March 31 2018,” the JSE’s statement said.

Pepkor is scheduled to release its results for the year to end-September on Monday.

In its interim results released in May, Pepkor disclosed it needed to make a provision of R500m regarding debt guarantees to its parent, Steinhoff.

In a trading statement released on November 20, Pepkor listed this provision as one of the reasons it expected basic and headline earnings per share for its 2018 financial year to decline by about 37%.

The JSE said in Monday’s statement that Pepkor had fully co-operated with the investigation and given “sufficient assurance that steps have been taken to address these breaches”.

Of the R5m fine, R1m is suspended for two years.

laingr@businesslive.co.za