Johannesburg, 21 Jan 2009
Black-owned IT company Choice Technologies will appear in court on 23 February to contest a liquidation order, obtained against it by JSE-listed Square One Solutions Group.
In October, Square One filed a provisional liquidation order against Choice, through subsidiary Structured Infrastructure Solutions (SiS), for money allegedly owed to it.
However, Choice has criticised the move as an attempt by Square One to “eliminate an opposition company”.
Meanwhile, Choice financial director Denesh Naran says the company is in talks with potential investors, which could lead to a bailout, but he refused to give further details at this stage.
“There is nothing firm or finalised at this point,” he says.
At the time of receiving the liquidation order, Choice CEO Semela Tseka outlined the company's position in an internal memo to staff.
It is understood that the dispute between the two companies arose from an attempt by Square One to take over a 49% stake in Choice, held by the National Empowerment Fund, as well as the remainder of the interest, held by the Choice Group. The initial deal was discussed in April/May last year, and received board approval from Choice.
“As part of the process, Square One Solutions Group purported to have access to the required funding to sustain the company and staff, among other things,” Tseka says in the memo.
Square One's involvement in the liquidation of a company called Tecor prompted the NEF to request Square One to provide guarantees for the purported funding it claimed to have for the transaction, but this was not forthcoming.
The Choice liquidation order, according to sources close to the company, is based on a disputed R2.8 million, which Square One claims is owed to it by Choice.
Tseka says Square One purchased 100% of SiS last year - a company that was often subcontracted by Choice to do cabling for customers.
“Square One Solutions then used SiS to put in a claim against Choice for work done on our behalf and monies which they claim were owed to them. The monies they claim are owed to them are in dispute by us, as the work by them was not completed.”
Square One has previously refused to comment on the matter, saying it is sub judice.
Related story:
Choice fights liquidation order
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