A lifeline for Choice

By Nicola Mawson for Choice Technologies

Johannesburg, 20 Aug 2009

Choice Technologies, which was put into liquidation last year, is close to being bailed out after the Pretoria High Court this week agreed to a scheme of arrangements proposed by a holding company, Chenzira Holdings International.

Choice's creditors are believed to be owed about R100 million. The scheme may see secure creditors being paid out and operations at the company continue, with most of the more than 200 staff retaining their jobs.

Liquidator Deon Botha, of Corporate Liquidators, says if the deal is not agreed to, and liquidation proceeds, staff will lose their jobs and only the National Empowerment Fund (NEF) will receive any money owing. It is not known how much the NEF is owed.

Chenzira was founded in 2004 and has several divisions, including Chenzira IT Solutions and Chenzira Telecoms.

New markets

Chief operating officer Manuel Alvares says the company is keen on Choice, which it will incorporate into its IT division, as it will add value to Chenzira and allow it to target new markets, including the public sector. Choice's partners include HP, Cisco and Microsoft.

The deal would also allow Chenzira to expand its current offerings, he says. Its IT division offers strategic consultancy services, is an Internet services provider and also offers closed-circuit television solutions.

The telecoms division focuses on voice offerings, and provides PABX and business telephone services, call centre solutions, switched PSTN services, as well as video and audio conferencing solutions.

Creditors have until 27 October to accept the deal to bail out Choice, which is when the matter will return to court. Choice management was not prepared to comment.

Square One, which put the black-owned IT company into liquidation last year, was not available for comment this morning. JSE-listed Square One claims money is owed to it by Choice and obtained a liquidation order through subsidiary Structured Infrastructure Solutions.

It is understood the dispute between the companies arose from an attempt by Square One to take over a 49% stake in Choice, held by the NEF, as well as the remainder of the interest, held by the Choice Group. The initial deal was discussed in April and May last year, and received board approval from Choice.