FoneWorx in BEE deal

By Damaria Senne, ITWeb senior journalist
Johannesburg, 06 Nov 2007

AltX-listed FoneWorx is selling a 30% shareholding to Kabo Capital for more than R43 million.

FoneWorx is a telecommunications value-added service provider offering infotainment, business and content, and switching services.

Kabo is a newly-established black economic empowerment company, headed by former Johnnic Communications CEO Connie Molusi.

FoneWorx says the transaction will see Kabo buy more than 40 million shares from the company and from some of the directors.

Kabo acquires 20.33 million FoneWorx shares at R1.06 per share, said FoneWorx in a Stock Exchange News Service announcement published yesterday.

The share price represents a 14.5% discount to the 30-day volume weighted average price of FoneWorx on 23 July, when the companies reached an agreement for the transaction.

Kabo also acquires another 20.47 million FoneWorx shares, at R1.06 per share, directly from FoneWorx directors.

CEO Mark Smith is selling 5.5 million shares. Ronald Graver, a director in charge of content, is selling 4.26 million shares; while financial director Gareth Tudor is selling 10.71 million shares.

"These directors have agreed to sell the shares referred to at the abovementioned discount in order to reduce the number of new shares issued, so as to reduce the impact of dilution on all shareholders," the company says.

The proposed transaction requires board approval, a due diligence exercise by Kabo and regulatory approvals, according to FoneWorx.

In September, FoneWorx reported that revenue increased by 75%, to R58 million, in the financial year ended June. Net profit before tax jumped by 376%, to R11.9 million, with the net profit margin improving to 20.5%, from 7.5% in 2006.

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