Glotec subsidiaries sold for R1

By Iain Scott for Global Technology
Johannesburg, 15 Jul 2003

Global Technology (Glotec) is to sell four subsidiaries for R1. It has also warned that it will report a significant loss for the six months to end-June.

The group says it entered an agreement with former CEO Ray Leonard and Lexshell 577 Investments to sell to Lexshell its shares and claims in Global Technology Services, AJS Software Developments, Xpertek Risk Management Products and Sagacious Systems.

Lexshell is also assuming certain Glotec liabilities as part of the deal.

"Leonard has bound himself as surety and co-principal debtor for the obligations of the purchaser," Glotec says.

Leonard resigned from Glotec last month and began to negotiate to buy the group`s banking division. Glotec also decided to dispose of parts of its professional solutions division.

However, the Glotec board and the Leonard consortium failed to reach agreement on parts of the banking division, in particular Temenos Southern Africa and Global Technology EBS. The boards of those subsidiaries subsequently applied for voluntary liquidation.

Glotec says Lexshell has assumed the interim management of the four subsidiaries until the fulfilment or waiver of the suspensive conditions for the deal.

These include obtaining a fair and reasonable opinion, various banks releasing Glotec from obligations under funding agreements, and shareholder and regulatory approval.

"In its capacity as interim manager, the purchaser will ensure that each of the companies comply with all of its obligations and that none of the companies incur any liabilities other than in the ordinary and normal course of business," it says.

"The purchaser and Leonard have indemnified Glotec against all losses and/or liabilities incurred during the interim management period."

Glotec has also warned that its loss for the six months to 30 June will be significant. It has renewed an earlier cautionary notice saying it is in talks that could affect the share price.