Sizwe IT Group has finalised its buyout from JSE-listed ConvergeNet Group in a deal worth R120 million, although a few conditions remain.
The move has led to a change in ownership and the resignation of CEO Tim Modise, who has also sold his stake. It will also lead to another black economic empowerment (BEE) deal.
Sizwe, a level two empowerment company, is now owned by companies including Alexisource, represented by Hanno van Dyk; and Loxisource, which is owned by Sibongile Radebe and Mendo Cables.
ConvergeNet's sale of Sizwe, announced in July, was part of the listed company's restructuring. It also announced it would shut down its head office, and had plans to retrench staff as a result of its "deteriorating financial performance" due to "excessive costs and a lack of strategic focus".
Modise will pursue new ventures in the ICT sector and will consult to Sizwe on an ad hoc basis. He is succeeded by Van Dyk, who will assume the role of CEO.
"The board would like to extend their warmest thanks to Modise for his outstanding leadership and service to the company. We have learned a great deal from his knowledge and vision, and wish him well in his future endeavours," says Van Dyk.
Sizwe is also finalising a further BEE transaction, which will put the revised shareholding into the hands of "a very strong BEE contributor," it says.
Strengthening
Van Dyk, formally Sizwe's CFO, studied accountancy and was an accountant in a civil engineering concern for a few years. He entered the IT sector as an entrepreneur to run his own business for six years, before founding Sizwe with Ben Kekana in 2001.
"While the past two years have seen little revenue growth, the restructuring process completed during August 2013 aligns the business with current challenges facing the ICT sector, and we are already seeing a difference in client service delivery levels and revenue.
"Going forward, we see growth in the managed services, unified communications, and the fibre and facilities businesses. Our experienced management team, with the support of technology partners and vendors, will deliver on our growth targets for 2014," says Van Dyk.
ConvergeNet did not strip out Sizwe's figures in its latest results. These, reported for the six months to February, show revenue gained 16%, to R483.3 million, but its loss grew 109%, to R23.2 million. Its headline loss per share narrowed 28%, to 1.7c, but its loss per share leapt 185% to 1.97c.
In March, ConvergeNet bought an additional 25% stake in Sizwe - taking its holding to 100% - for R45 million.
The restructuring has also seen changes to the board, which will be chaired by Vukile Mehana, and will include Van Dyk, Sibongile Radebe, Sagie Naidoo, Minderd Spoelstra and Steve Naude.
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