Embattled Faritec, which is trying to raise R60 million to keep afloat and is selling several business units, has asked the JSE to suspend trade in its shares and has admitted to being in a financially precarious situation.
Yesterday, ITWeb revealed the company is in talks with a former director to sell its managed services unit, which used to be its third-largest revenue-spinner.
Faritec has also abandoned its original plans to raise cash through a partially underwritten rights offer. It is now in talks with Tabara Investments and a management consortium to raise R30 million and wants to swap a cent of debt for shares worth 1c.
The company's shares closed at 3c yesterday, after hitting a 52-week low of 2c on Wednesday, before Faritec asked the bourse to suspend trade this morning.
Faritec's reasons are based on the fact that it is in discussions with several parties to raise cash and sell business units, and information is being leaked to the press about these deals.
“Given that the situation is constantly evolving, the board of Faritec is concerned that it may not be in a position to ensure the confidentiality of unpublished price-sensitive developments, or to ensure the market is adequately and timeously informed of any and all price-sensitive developments as these occur,” the company states.
Faritec also says it appears that “confidential information is being leaked from within Faritec to one or more financial publications”. CEO Fanie van Rensburg says the board needs to protect the share price as price-sensitive information is being leaked.
Confirmed
Faritec this morning publicly admitted it was in talks with Peter Winn, a former director, to acquire its managed services business for R3.1 million.
However, as Winn is a former director, the deal would require shareholder approval, or the JSE's green light to dispense with the requirement to receive shareholder approval.
The company says it has received various offers for the business. One of the offers is from Integr8 Group, which claims to be the largest privately-owned ICT company in Africa.
Joint CEO Rob Sussman tells ITWeb that he wrote to Van Rensburg on Wednesday indicating the company would be interested in putting in an attractive offer.
However, Sussman says he has not been successful in securing a meeting with Van Rensburg, and has been told that a meeting would only happen next week. Winn's offer to Faritec expires at close of business today.
“We believe that it would be in your and Faritec shareholders' interest to allow Integr8 to also submit an attractive 'offer to purchase' with regards to this business unit and its respective contracts,” Sussman writes in the letter.
He adds Integr8 would takeover the associated resources with regards to these contracts, and transition of staff would be seamless.
Chris Gilmour, an analyst with Absa Investments, says Van Rensburg and the board have a fiduciary obligation to consider all offers. “He needs to go out and look for the best offer, otherwise he could be in deep trouble.”
Van Rensburg says, however, that the company will stick to the letter of the law when disposing of units.
Faritec has also confirmed it sold its Microsoft large account reseller business to First Technology last week, for R2.2 million.
Under pressure
Despite its efforts to sell off business units and raise cash, the company says its working capital is under pressure and “Faritec remains in a precarious financial position”.
A week ago, the company told staff they would only be paid half their salaries last Sunday, with the balance to be paid in the first week of May. Van Rensburg says the company expects to release the remainder of salaries today, which should reflect in bank accounts tomorrow.
Sussman says he has also offered to take over some of Faritec's staff and contracts if the company is unable to honour these obligations.
“With the more recent public news that certain Faritec personnel were not going to be receiving their full salaries, you can only imagine that there are many CVs floating around the market,” wrote Sussman.
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