JSE-listed telecoms and IT solutions provider FoneWorx will buy back the Industrial Development Corporation's (IDC's) 30% holding in the company, before on-selling the stake.
FoneWorx will buy the stock back at a price of between 130c and 139c a share and then sell the stake to Isaac and William Kirsh (the Kirsh family), at the same price, at a value of between R53 million and R56.7 million. Shares in the company closed at 105c, a 5c, or 5% gain yesterday.
In a statement, the company says the deal “marks the first step in the development of a strong strategic relationship between FoneWorx and the Kirsh family's interests”. FoneWorx expects a new strategy for the group.
CEO Mark Smith says the IDC has been a supportive, but passive shareholder. “However, Issie and William Kirsh, respected South African entrepreneurs, will join us as strategic, value-enhancing shareholders.”
Smith notes that the Kirsh investment in FoneWorx creates a strong platform for growth with a longer-term vision of aligning FoneWorx with assets the Kirsh family has built up recently.
After the deal, the Kirsh family will own 33% of FoneWorx and the balance of the shareholding is mostly owned by the directors of the company. However, the Kirsh family can require FoneWorx to buy back the 30% stake within six months of the effective date.
“We have a strong balance sheet and cash on hand approaching R100 million, which provides a solid foundation for investing for the future of the business.” Smith says.
FoneWorx has, over the last six years, delivered a 22% compound annual growth in turnover to R91 million, and over the same period delivered compound net profit growth of 50% up to R19.5 million.
It reported a 14% rise in revenue to R52.5 million, for the six months ended December 2011.
The agreement is subject to conditions.
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