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SteinhoffBusinessLive reports that Steinhoff International repurchased 40.4-million shares from its employee share-participation scheme in a transaction valued at about R2.3bn around 24 October 2017.  

This was just weeks before the December 2017 announcement about "accounting irregularities" that wiped out most of the value of the shares.  The purchase of shares from a special purpose vehicle Steinhoff Sikhulasonke Investments, which was set up as an employee/black economic empowerment (BEE) initiative in 2008, was part of a 78.4-million share repurchase transaction undertaken by Steinhoff.  It cost about R4.7bn in total.  The substantial cash outlay took place just weeks after Steinhoff’s audit committee was alerted to potential problems by Deloitte.  Although it is not uncommon for companies to repurchase their shares, this appears to have been the first repurchase by Steinhoff since its listing in Frankfurt in 2015.  Share repurchases can be used as a tool for capital management, but can also be manipulated to support a share price or boost reported earnings per share.  Steinhoff’s 2016 annual report indicated that the scheme was structured so that about 12,000 employees would own Steinhoff shares after nine years.  This week, Steinhoff confirmed that employees were paid cash instead of receiving shares, but would not say at what share price the payout was.

  • Read this detailed report by Ann Crotty in full at BusinessLive


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