JSE-listed IT services and solutions group Faritec Holdings has entered a long-term debtors securitisation funding programme that has seen it raise R100 million from investors in the capital markets at fixed rates for five years.
Securitisation is the process of combining financial assets to create a new financial instrument that is then marketed to investors.
At the same time, the group has acquired, through subsidiary Faritec Enterprise Solutions, the business of Ubusha Technologies, which includes a 30% stake in Linux System Dynamics.
The price tag is R26 million, of which R23 million is to be paid in cash, with the balance consisting of Faritec shares.
Faritec explains that its board decided to refinance the current short-term debt facilities with longer-term secured finance.
It says the need for this resulted from revenue having grown - organically and by acquisition - from R530 million in 2006 to about R1.1 billion in 2008, resulting in a monthly revenue run rate increase from R44 million a month to about R100 million a month. This was done without a corresponding increase in credit facilities.
Credit rating
In the past year, it has been supplementing the working capital and bank-provided trade credit facilities with expensive trade finance from suppliers.
"The company expects to continue to grow in the future, both organically and through acquisition, and requires stable funding at competitive rates to fund this anticipated growth," it says.
The programme involves the sale of certain trade debtors of subsidiaries to an independently owned special purpose vehicle, FRT Debtors Finance, which has issued R100 million Class A, 60-month secured non-amortising rated debentures, which have attracted a zaAA credit rating from Global Credit Ratings.
These debentures have been issued to investors in the capital markets.
Faritec says the Ubusha acquisition gives it an immediate and substantial presence in the specialised identity and access management field.
Ubusha supplies Novell identity and access management solutions, with customers in the financial, telecommunications and public sectors. It also operates in the Linux and open source software services space through Linux System Dynamics.
The Faritec share closed unchanged at 42c on the JSE yesterday, having touched an intraday high of 43c, as 195 200 shares changed hands in six deals.
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