Stock in Net 1 UEPS Technologies traded more than R25 lower during Thursday trade, after news emerged that its R10 billion contract, with the South African Social Security Agency (SASSA), has been sent back to the drawing board.
Net 1 says in a statement to shareholders that the agency needs to issue a new tender within the next 30 days, which must make sure that no legitimate current social grants are lost, payments are not interrupted, and that personal data remains private.
The decision follows last November's ruling that the contract was invalid, but its future was put on hold, pending a Constitutional Court decision over an equitable remedy. Thursday's declaration of the remedy sent Net 1 shares sharply downwards, before they recovered slightly to close the day R85.50, from an opening price of R95.10.
Net 1's stock hit a 52-week low last May, when it dropped to R65, while its 52-week high was R129.99, which it reached last September. The company says it cannot predict the outcome or timing of the new process.
"The contract between SASSA and [subsidiary Cash Paymaster Services] CPS to distribute social welfare grants to 10 million South Africans every month remains in full force and effect until SASSA has completed the new process and decides to award the new tender, or for the remainder of the current five-year contract, if they decide not to award the new tender."
CEO and chairman Serge Belamant says the company is "relieved that the protracted two-year legal battle regarding the SASSA tender is finally over and that the court has provided guidance regarding the way forward".
The last chapter in the battle was initiated when losing bidder AllPay, a unit of big four bank Absa, turned to the Constitutional Court in yet another attempt to have the multibillion-rand tender process declared invalid.
AllPay argued the five-year deal, to service around 15 million grant recipients, was not awarded lawfully when it was inked in January 2012. AllPay's action followed its loss in the Supreme Court of Appeal, which is where the matter was heard after the North Gauteng High Court ruled that, while the deal was illegal and invalid, it would remain in place so that payments could continue.
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