Johannesburg Stock Exchange-listed Faritec has announced to staff they will only be paid half of their April salaries this Sunday.
ITWeb was contacted by a Faritec staff member who wants to remain anonymous, stating an internal e-mail had been sent to Faritec's staff informing them of the following:
“We would like to inform you that your salary will be paid as follows for the month of April 2010:
* All staff will receive 50% of their salaries tomorrow or Sunday and the remainder will be settled end of the month or early May.
* Commissions will only get paid at the end of the month or early May.
* The directors will only get paid at the end of the month or early May.
* Resignation will be paid as normal at the end of the month.”
Faritec CEO Fanie van Rensburg spoke to ITWeb on Friday afternoon and confirmed the following: “Half the salaries will be paid on Sunday and the balance will be paid on the 30April and this will include commissions and leave pay.” He asserts the original e-mail's indication that the salaries, commissions and directors' salaries will only be paid in “early May” is a factual mistake.
He says the reason for the split in payment was that the company was still waiting for certain monies to be paid to it which will happen next week.
Van Rensburg says the company was still raising the R60 million in cash that it announced in March, but was still fulfilling certain conditions. When asked whether the company was still solvent or liquid, Van Rensburg refused to comment.
XHead = Trying times
The news comes after a grinding period for Faritec after it appeared to be unsuccessful in raising R60 million through a rights offer in March. Only half of the rights offer was underwritten by its major shareholder Shoden Data Systems.
At the time of the rights offer, Van Rensburg said: “We've got one opportunity to fix this thing and that's the opportunity now.” He said the company was in discussions with several parties and hopes to announce an inked deal soon.
In its interim results for the period ended 31 December 2009, Faritec reported a drop in revenue to R259 million from R364 million from the year before. The loss for the period from continuing operations was R16.6 million from R23 million before.
When it released these results, the company said adverse trading conditions had negatively impacted it, but that the turnaround was on track.
Industry sources say Faritec's business model was too heavily centred on supplying hardware and that the economic downturn had hit it hard. “The problem for Faritec was that its annuity income was very small,” one source says.
Faritec was also recently the losing bidder in the controversial Companies and Intellectual Properties Registration Office enterprise content management system that was awarded to ValorIT for R153 million.
In late afternoon trading, Faritec's share price was flat at three cents and its current market capitalisation stands at around R56.7 million.
A stockbroker said only 25 000 of its shares traded today, but yesterday there was a flurry of activity with some 2.5 million shares changing hands.
Related story:
Faritec trims loss
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