Embattled Faritec has ditched its original plan to raise R60 million in favour of another cash-raising exercise.
The company, which said late last year it needed to raise R60 million for working capital and to implement a turnaround plan, has decided not to issue cash for shares. Instead, it aims to convert debt into shares, and receive a R30 million injection from management and Tabara Investments.
Under the new plan, creditors who are owed money by Faritec Enterprise Solutions will be issued one Faritec share at a price of 1c for every 1c of debt. Faritec's shares are trading at 3c.
The company had initially mooted a plan to raise cash on the JSE through a rights offer. However, between management and majority shareholder Shoden, only R30 million of the required R60 million was underwritten.
Faritec has now decided not to proceed with the rights offer, but has not provided any reasons. It did warn shareholders that its working capital remains under pressure. The company is also restructuring to trim non-core divisions.
Last week, staff members were told that they would only be paid half their April salaries on Sunday. The rest of the salaries would either be paid by month-end, or early May.
Tough times
However, the company has been trying to raise the R60 million for some time. Last month, it said it had reached agreement with creditors to swap R25 million in debt for shares, while R30 million of a rights offer would be underwritten by management and Shoden.
Shoden has already injected R20 million into the company in return for a 51% stake. Shareholders have also already bought into a R29 million rights offer.
CEO Fanie van Rensburg, who was not available this morning, has previously said he would inject R5 million of his own cash into the company, as he believes in its potential.
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