Deal to restore Glotec`s solvency

By Iain Scott for Global Technology
Johannesburg, 15 Dec 2003

Global Technology (Glotec) has struck a deal with its financiers to convert about R46 million debt into Glotec equity by way of a partially underwritten rights offer at 2c a share.

At the same time, the group has announced an agreement to dispose of subsidiary Brolink for R12 million in a management buyout to be carried out through a special purpose vehicle.

Glotec CEO Graeme Victor says the deal with the group`s financiers will restore Glotec`s solvency and ensure sustainability.

The decision to sell Brolink came after determining that the company was no longer a core focus of the group.

The deals are set to have a positive effect on Glotec`s balance sheet, which was looking shaky at the end of the first half of its financial year. At 30 June, current assets of R53.22 million were heavily outweighed by current liabilities of R131.84 million.

The group had bank balances and cash of R4.18 million at the time.

Glotec now has two remaining divisions - Global Technology Business Intelligence and Associated Computer Solutions. Through these operations it provides business information solutions including business performance management and enterprise resource planning.

"Looking ahead, based on our new stronger financial footing, we will continue to focus on growing the group, Victor says.

The group has undergone a significant restructuring that included the sale of several of its businesses, including its stake in Temenos SA. It also sold for R1 four subsidiaries, along with their debt liabilities, to a consortium that included former CEO Ray Leonard.