The J&J Group has exercised its option to acquire additional shares in JSE-listed IT solutions and services company Faritec.
The move increases its direct shareholding in the organisation by 24.4%, which - when added to the 14.2 million Faritec shares purchased in 2005 - takes J&J's shareholding in Faritec to 30%.
The J&J Group, founded by political activists Jay Naidoo and Jayendra Naidoo, has been a Faritec shareholder since July 2003. At that time, the group acquired a 30% stake in Faritec Holdings subsidiary, Faritec, as part of a black economic empowerment deal. In turn, Faritec Holdings acquired an equivalent stake in J&J via an investment in J&J preference shares.
The vendor-financed transaction gave J&J the option to dispose of its shareholding in Faritec to Faritec Holdings after three years in exchange for the issue of shares in Faritec Holdings, and redemption of the J&J preference shares.
In a statement to shareholders on Friday, Faritec advised this option had now been exercised, with a purchase price of R103.6 million payable to J&J for its shares in Faritec.
The purchase price will be settled by the issue of 61.7 million Faritec Holdings shares, at R1.37 per share, and redemption of the J&J preference shares for R19.3 million.
Earnings-enhancing
Simon Tomlinson, CEO of Faritec, says the transaction will have a favourable financial impact on the company.
"The exercising of the J&J option is earnings-enhancing to Faritec for the remainder of this financial year and the next financial year, due to the fact that since the BEE transaction was concluded with J&J in July 2003, Faritec Holdings has only been recognising 70% of its earnings. The shares issued to J&J represent 24.4% of Faritec's now issued share capital and will, therefore, have the effect of improving the earnings per share proportionately."
Jayendra Naidoo, J&J Group CEO, adds: "As value-added investors in Faritec for the past four years, we are happy to confirm our partnership with Faritec. The company has a positive reputation in the marketplace and solid management who are committed to working with us to create value for all shareholders."
"Financial transactions need to create value for the shareholders of an organisation. This transaction is proof that the J&J Group is committed to contributing to Faritec's ongoing drive to grow the business to new heights and to help build a truly South African company," concludes Tomlinson.