Thu, 28 May 2020

Retailer Pepkor, a subsidiary of Steinhoff [JSE:SNH], has lost an application for leave to appeal a court order barring it from selling off shoe retail chain Tekkie Town.

Pepkor on Monday confirmed that its application for leave to appeal a judgment handed down by the Western Cape High Court in April had been refused. In that judgment, the court barred Pepkor from disposing of the shares it holds either indirectly or indirectly in Tekkie Town.

Pepkor had then sought to appeal the ruling, and arguments were heard on Friday.

While Pepkor maintains that it has no intention to sell Tekkie Town, it will now "out of principle" petition the Supreme Court of Appeal (SCA) for leave to appeal as the order "infringes on its right to do business".

"Pepkor bought Tekkie Town for full value from Steinhoff and there shouldn't be any restriction on how we can deal with this business, whether it is to give notice or otherwise. We are being unjustly associated with a deal that happened between the former owners and Markus Jooste," the retailer said in an emailed response to Fin24 about its decision to approach the SCA.

However, Tekkie Town's former CEO, Bernard Mostert, told Fin24 by phone that Monday ruling was "an utter relief". Mostert and other co-founders of the shoe retail chain are involved in a court battle to regain ownership of the brand. Monday's interdict, which prevents Pepkor or Steinhoff from selling off Tekkie Town, is important, Mostert said.

"The interdict prevents our business from being damaged beyond the point that it can be returned to us," Mostert said.

Tekkie Town was bought by Steinhoff in late 2016, and was later transferred to Steinhoff Africa Retail (STAR), the JSE-listed company that contained Steinhoff's African retail assets. After Steinhoff's share price plunged in December 2017 amid an accounting scandal, STAR changed its name to Pepkor, Fin24 previously reported.

We don't have plans to sell off Tekkie Town, says Pepkor as court case looms

In June 2018 Tekkie Town's founders quit Steinhoff and launched a new shoe retail chain called Mr Tekkie later in the year. But the founders still want Tekkie Town back. No court date has been set for the hearing on this matter, Mostert confirmed.

They have contended in court documents that the exchange agreement with Steinhoff - which resulted in Steinhoff getting a stake in Tekkie Town through the exchange of Steinhoff shares - was based on financials from Steinhoff which have since been revealed to be irregular, Fin24 previously reported.

'Face of the fight against Steinhoff'

"The Tekkie Town story and our quest to regain our business, for many people, has become the face of the fight against Steinhoff and justice being done. We did not have a big business. We come from a fairly small community in George.

"It's been a long journey, since December 2017. We are grateful to be making progress, even though it is slow," Mostert said on Monday.

Responding to Pepkor's intentions to approach the SCA, Mostert said he is "not surprised".

"Pepkor is a Steinhoff company; they are obviously fighting for their own survival. But is it clear from all the evidence that the former founders of Tekkie Town were defrauded. No one disputes the fraud. Pepkor itself is suing Steinhoff," he said.

In its statement on the judgment, Pepkor stressed that it was not party to the initial transaction between Steinhoff and Tekkie Town, but it did purchase Tekkie Town from Steinhoff in 2017.

"The purchase of Tekkie Town by Pepkor was done with full consent and participation from the former owners, Braam van Huyssteen and Bernard Mostert, who were Tekkie Town directors at the time of the purchase," Pepkor said. Steinhoff holds no legal position to sell Tekkie Town, Pepkor added.

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