Vox Telecom, whose share price has shed 50% this week in the wake of Dealstream's collapse, says it is considering legal action.
"The company is evaluating its legal position in relation to the Dealstream events and in particular the claims it has against Dealstream, its directors and related parties, including in relation to any criminal actions."
News that the failed broker was holding R30 million of Vox's cash saw the telecommunication group's share plummet from a R2.20 closing price on Friday to a R1.10 close yesterday.
By mid-morning today, the share was trading at R1.15.
Vox is not the only company seeking legal recourse. Fellow JSE-listed group Control Instruments disclosed last night that Dealstream was holding about R3.4 million of its cash.
"Control Instruments used Dealstream to acquire approximately 23 million shares in the open market and its total expenditure in respect of these shares is approximately R10.4 million," the company says.
"Based on the information available, it appears Dealstream and/or its management and staff misappropriated the funds in the group's and the directors' margin and trust accounts. Control Instruments and its directors are currently taking legal advice in respect of claims they may have against Dealstream and its staff."
Vox issued a statement this morning on SENS, the JSE's electronic notice board, in part assuring investors that the group is fundamentally strong, and that the maximum after-tax loss in relation to the Dealstream collapse is less than 5c a share.
"The company considers that the sharp decline in the share price in recent days is a function of the close-out of derivative positions following the Dealstream events and is unrelated to operating fundamentals of the business, which remain sound," it says.
In the same boat
The statement echoes comments made yesterday by Vox CEO Doug Reed, who said share price movements had been solely on market sentiment and had nothing to do with the Vox business itself.
Vox explains that the group used Dealstream to acquire treasury shares in the open market, and the R30 million cash held by the broker at the time of its collapse arose from the disposal of Vox treasury shares.
"The balance of the potential loss relates to a provision for legal and related costs that may be required and staff loans that may, as a consequence of the Dealstream events, need to be impaired."
The statement says Vox directors' exposure does not affect the potential loss.
It is understood that many of Vox's employees had invested in the group through Dealstream in their private capacity. Reed has confirmed that many of Vox's staff members, including himself, lost money personally as a result of the events.
"Staff morale is okay, considering," he says. "We have a good team, and we're all in the same boat."
However, he says despite the distraction, the business is strong and is going on as normal, and adds that Vox has just achieved a record month.
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