M-Cell has warned shareholders that it will have an exposure to CNA if the newsagent and stationery retailer is liquidated.
"Shareholders will be aware of recent speculation relating to the M-Cell group`s potential exposure to the CNA group arising out of transactions between M-Tel, MTN and CNA," it says in a cautionary notice issued this morning. Cellular service provider M-Tel and network operator MTN are owned by M-Cell.
There have been questions about a deal between CNA and MTN, in terms of which MTN paid the newsagent R85m for exclusivity in its stores.
There were reports that the cash was used to pay off part of the purchase price due to Wooltru by Gordon Kay & Associates. CNA chairman Mark Gordon has denied any wrongdoing.
M-Cell says it will have an exposure to CNA should the newsagent be placed in final liquidation. "The directors are taking legal advice, including the advice of senior counsel, on the group`s potential exposure to CNA and we taking are and will continue to take appropriate steps to mitigate such exposure."
The group says it will make a further announcement once the position of CNA has been clarified and the legal advice considered. In the interim, it says, its shareholders should exercise caution in dealings in M-Cell shares.
CNA was placed under judicial management last week after investment banking house Corpcapital pulled out of a deal to buy it. Corpcapital said it was not satisfied with the findings of the due diligence it was performing.
It said it decided to pull out of the deal because it needed more time to complete the due diligence to its satisfaction, but Gordon Kay & Associates and Wooltru were not willing to grant more time.
The M-Cell share was trading at 1 090c on the JSE this morning, up 45c or 4.13% from yesterday`s close.
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