Softline reduces exposure to SVI

By Iain Scott, ITWeb group consulting editor

Johannesburg, 07 Sept 2001

Business and accounting software developer Softline has restructured its interest in US company SVI Solutions, resulting in a smaller shareholding in SVI and a larger stake in Irish software firm Integrity.

Softline has repeatedly come under fire for retaining its stake in the poorly performing SVI, and for the risks associated with an $11.7 million loan it made to the company.

The Softline share fell towards the end of August when the group announced the termination of talks with European company Shmulik Stein International Investments, which would have seen the disposal of the majority of Softline's stake in SVI in return for an 11% stake in Integrity.

However, the group has concluded an agreement with SVI and its advisers, Jefferies & Company, which will see Softline reduce its stake in SVI to 29.8% of SVI's common shares and $11.7 million preferred shares (convertible preferred securities).

The deal involves the exchange of the loan for SVI's 11% stake in Integrity and the issue of $2.9 million preferred shares to Softline. SVI is to issue $8.8 million preferred shares to Softline in exchange for 10.7 million SVI common shares currently owned by Softline.

Softline has agreed not to dispose of its remaining SVI common shares or preferred shares, without the consent of Jefferies & Company, for 12 months.

"Following our management team's decision to focus on improving the performance of key operations and reduce overheads, our group has emerged leaner, stronger and more focused," says Softline CEO Ivan Epstein.

"Along the way we have had to make some difficult decisions, including decisions about our future involvement with SVI.

"The restructuring of our interest in SVI will give SVI greater financial independence, while providing absolute clarity to our own shareholders that Softline has no further financial obligations in respect of SVI.

"Although we have not fully exited from our investment in SVI, we are able to assist SVI in this key step towards achieving financial independence, which will facilitate our exit in time."

He adds that another benefit of the deal is that Softline management can concentrate efforts on growing the core accounting and payroll software businesses. SVI previously required considerable management time over the past 18 months.

Dublin-based Integrity is a developer of software applications for small and mid-sized organisations in the distribution and contracting industries.

The applications include core accounting functions as well as key industry-specific functionality.

The Softline share price was unchanged at 129c on the JSE by midmorning today.