William Kirsh is determined to make a merger between his company, Value+ Nettwork, and JSE-listed FoneWorx happen, even if the board has to be reconstituted.
Last year, FoneWorx announced it and Value+ Nettwork, founded by William Kirsh, would merge to create a R478 million company. FoneWorx said it would pay R191 million through the issue of shares at 211c for Value+, which includes a 50.1% stake in Opengate Technologies.
However, the deal unravelled after FoneWorx's due diligence uncovered that financial figures at one of Value+'s subsidiaries had been materially changed, which would have required more funding than initially anticipated, FoneWorx CEO Mark Smith told ITWeb yesterday.
However, Kirsh argues that Smith's contention about material issues with financial figures at a subsidiary is "totally unfounded". He says this claim is based on incorrect facts. "They got their facts wrong."
The Kirsh family, which owns around 75% of Value+ and 32.7% of FoneWorx, has now called for an extraordinary general meeting in a bid to oust FoneWorx's non-executive directors. The company's non-executive directors comprise Gaurang Mooney and chairman Ashvin Mancha.
The Kirsh family argues that the "fundamental corporate governance weaknesses at FoneWorx are undermining the shareholders' opportunity of building shareholder value".
Meanwhile, Smith said the move was just the family hitting back at FoneWorx's refusal to ink a deal that would have been to the detriment of shareholders. He adds the Kirsh family is now becoming hostile.
However, calling a shareholder meeting is not sour grapes, says Kirsh. He says there are specific governance issues, uncovered during due diligence, at FoneWorx that need to be sorted out.
Kirsh says there is an imbalance on the board, because there are more executive directors than independent ones.
It is unfortunate that there are ructions in the deal and that the family has had to follow the route of calling the shareholder meeting, says Kirsh. He adds that the family did not get involved to be passive shareholders and wants to see the deal implemented.
It is not up to FoneWorx whether to go ahead, says Kirsh. He says the family will have the board reconstituted and "push ahead" as there is still an agreement in place.
Kirsh says Value+ got involved with FoneWorx with a specific purpose and still aims to achieve that. He says it is about carrying on with the journey.
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