JSE-listed electronics company Labat has renewed its cautionary announcement, and will enter the mining, pharmaceutical and telecoms markets, after a recent restructuring fell apart.
Labat was last year in the process of buying two gold processing operations on the East Rand from controversial mining company Aurora Empowerment Systems, for R38 million. In addition, its then majority shareholder, Links, was buying Labat's South African Micro Electronic Systems (Sames) for R4.5 million.
Aurora was also in the process of buying out Labat through its Aurora Investment Holdings subsidiary, and had offered 5c a share. Link sold 45.7% of Labat to Aurora.
Yesterday, Labat said the purchase of the plants and the sale of Sames had collapsed and Link's sale of its stake to Aurora was being unwound. The companies have entered into a settlement agreement, which will see Aurora give Link back 50 million shares.
New sectors
The three companies will work together to position Labat for “future growth” and the company is being restructured to focus on three new areas: mining, pharmaceuticals, and telecommunications and technologies.
Labat says in an announcement it will expand into these areas through a combination of organic growth and acquisitions. It has identified several strategic acquisitions and is in talks.
In addition, new negotiations around the gold processing plants have started, which could give Labat “control over two of only four ore crushing and gold smelting plants on the East Rand”.
The company has been in talks to raise money to implement its restructuring plan. It says offshore fund GEMS has agreed in principle to make funds of up to $50 million available for pharmaceutical acquisitions. Other funds are being sourced for the development of the technologies operation, says Labat.
At the end of February 2010, Labat reported a R59 million loss and said its liabilities exceeded its assets. Its change in controlling shareholder from Link to Aurora was meant to aid its return to profitability.
After the settlement agreement, Labat no longer has a controlling shareholder, as Aurora's holding will drop from 45.7% to 20.3%. Link will hold 25.4% of Labat, after the return of the 50 million shares.
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