Black empowerment company, Motswedi Technology told ITWeb today that it had exited its relationship with JSE-listed IT company, MGX.
"As far as we are concerned, the relationship with MGX is over. In terms of the shareholder agreement certain clauses have been invoked allowing us to buy back MGX`s 19% shareholding in Motswedi," says Joe Tsotetsi, chairman and co-founder of Motswedi.
He would not disclose the figure or the terms of the sale.
MGX acquired its stake in Motswedi a little over three years ago and the companies have since won a number of governmental contracts together, including projects with Statistics SA, Telkom and MultiChoice.
Motswedi has accused MGX of a number of breaches of agreement and opposed MGX`s acquisition of CCH because of conflict of interest.
MGX CEO Chris Hills has refuted Motswedi`s claims that it has terminated the relationship. "Motswedi has no legal right to remove us as shareholders," says Hills.
According to Tsotetsi, MGX directors - Cris Hills, financial director Rory Shirley, and outsourcing CEO Rob Brickhill - are no longer directors of Motswedi Technology Group.
"MGX representatives resigned from the Motswedi board due to concerns about the financial position of the company and lack of information," comments Hills.
Hills says MGX still holds 19% of Motswedi with an option to increase that stake to 40%. He adds that Motswedi owes MGX a substantial amount of money, which MGX will be implementing steps to recover.
Tsotetsi says there is no outstanding amount owing to MGX.
Hills claims that MGX has paid Motswedi for all the work it had performed on contracts that the two companies had jointly won.
Independent research conducted by analysts at Vantage Investment Solutions and distributed by Tradek.com late yesterday says: "The Motswedi relationship is important but not critical to the financial performance of MGX. We estimate that financial benefit from the relationship with Motswedi accounted for less than 5% of MGX`s profits in F2001."
The report also noted a R10 million loan annotated in the MGX 2001 annual financial report.
Motswedi issued ITWeb with a strongly worded press release this morning, and Hills says MGX is trying to gain an urgent injunction to halt further distribution and publication of this document.
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