Once upon a time, way back when, Markus Jooste and Christo Wiese were thick as thieves.
Wiese was actually Jooste’s mentor, the latter being taken under the former’s wing when he was just a young articled clerk.
That would eventually lead to the two becoming business partners, but in a stunning turn of events Jooste has now left Wiese in the lurch for around R200 million.
The details of the betrayal are contained in the papers filed before the Western Cape High Court last month by Absa bank to have Markus Jooste’s Mayfair Speculators liquidated, with these details via Moneyweb:
…he [Jooste] removed nearly all the assets from the company before leaving his good friend Christo Wiese on the hook for over R200 million.
It’s all a little technical from here on out but bear with us:
The story began almost exactly a year before, in December 2016, when Mayfair, represented by Jooste’s son-in-law Stefan Potgieter, and Absa concluded a financing arrangement, which saw the bank providing Mayfair with an overdraft facility amounting to R335.6 million and bank guarantees of a further R14.4 million (in total R350 million). To secure this, from Jooste, Absa received a suretyship of R100 million and cession of a share portfolio consisting of Steinhoff shares.
In addition though, the court papers reveal that Absa required “an unconditional, irrevocable on demand limited guarantee by Upington Investment Holdings” for an amount of R350 million “pursuant to which Upington would guarantee the due and proper performance by the Respondent of all its obligations under the Facility Agreement….” – bank-speak for Upington standing behind any and all obligations of Mayfair up to the limit of R350 million…
Following the upheaval on December 6, when Markus Jooste resigned as CEO, the Steinhoff share price collapsed from R55 to R17, which meant that Mayfair was in breach of its covenants as the outstanding balance of the loan – which stood at R220 million at that point – was barely covered by the value of the shares (R255 million). The difference (or buffer) was nowhere near what had been stipulated in the loan agreement. Absa pointed this out to Mayfair and informed it via a letter the following day that a default event had occurred.
Now they spell out what happened next in great detail, which I’ll spare you, but here’s how it all wraps up:
By December 13, the Steinhoff share price had sunk further to R9.80 a share, meaning the value of the security (R142 million) was now well short of the outstanding amount of R226.3 million. Also, no response had been forthcoming from Mayfair on how it planned to correct the situation. Absa had no choice but to begin selling the shares, initially 6.7 million of them, which raised proceeds of R70 million. It has since instructed the broker to sell the remaining shares.
Assuming an average selling price of R10 a share, the proceeds raised should amount to approximately R150 million. This means that Absa is short about R80 million and counting, which Christo Wiese must now stump up for, in addition to the 14.49 million shares in Steinhoff he ceded and has now already lost. This might be small change next to the over R60 billion that has been erased from Christo Wiese’s balance sheet as a result of the shenanigans and possible fraud Jooste has wrought on Steinhoff, but it will be painful nonetheless since it was inflicted by a man he once regarded as his friend.
There really is no honour amongst thieves.
Guess it’s not just the people of Hermanus who will be sick of the sight of Markus.
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