Listed IT staffing and education group Advtech has announced it is no longer for sale and is embarking on litigation to reclaim some cash from the purchase prices of the Communicate Group as well as the Bryan Hattingh Group.
Advtech executive chairman Brian Buckham says the group is taking legal action against the two companies in respect of the earn-outs and warranties they provided at the time of purchase.
There is no figure set on the amount to be reclaimed, but Buckham says it is "significant".
Bryan Hattingh, founder and namesake of the recruitment group says there is no date set for arbitration.
"The matter currently rests with the auditors and there is no certainty that it will go to arbitration," says Hattingh.
"The dispute arises from the profit calculated in the second year of warrantees which had an agreed and audited set results.
"Added to this there is a concurrent counter claim by the executives of the [Bryan Hattingh] group surrounding commissions."
The announcement to investors issued on Friday afternoon after the bell also disclosed Rob Childs will be assuming the role as CEO from Brian Buckham, who stepped into the breach as acting CEO after Renney Plit left the company in May.
Child, hailing from SA Breweries, will take up the reigns on 9 July.
In addition, Hugh Brown, Motty Sacks and Lenn Honey have also been appointed to the board of directors with effect from 29 June 2001. Hugh Brown will continue in his position as a consultant to the company.
"We are directing all our efforts at making sure the individual business units are trading profitably and meeting their budgets. Prospects for the group are encouraging," Buckham notes.
Buckham says the company is relatively highly geared as a result of the decision to settle acquisition vendors in cash rather than shares because of the low share price. This situation will improve significantly during 2002 and should reduce to a negligible level during the following year.
"The focus is now on digesting the acquisitions we have made over the past few years and to reduce our gearing over the next twelve months. There are obligations to vendors of approximately R24 million to be settled this year."
"However, EBITDA (Earnings before interest, taxation, depreciation and amortisation) is budgeted at approximately R85 million. In addition, management will focus on optimising cash flows and generating organic growth within the business units."
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