IT products and services company Pinnacle Technology Holdings says in a cautionary notice that its board is considering proposals which could lead to its delisting from the JSE.
Pinnacle joins a growing list of technology companies that have either recently delisted or are planning to delist, including MB Technologies, Softline, Aqua Online and Zaptronix.
The Pinnacle board is also considering a payment to minority shareholders in the form of a cash offer for their entire shareholding in the company.
Alternatively, a cash payment may be made to shareholders on the basis that Pinnacle`s operations or subsidiary companies are sold for cash.
Analysts have taken a cautious view on the announcement, saying that although the company had performed poorly for a while, the last few sets of results showed a substantial improvement.
"It looks like it could be another case of wanting to take a company off the market just as things start getting better," one analyst says. "I have a big problem with that."
Pinnacle has recently been awarded significant government business and appears to be doing well on the operational front.
He says it will be interesting to see what offer is made to minority shareholders. Although the share price is currently at around 14c, Pinnacle`s tangible net asset value at the end of December was about 48c a share.
Undervalued
"The share is definitely undervalued. My valuation of the company is 30c," he says, although there is still some risk involved. He points out that there is still a negative operating cash flow, although both operating margins and return on equity have been improving lately.
Another analyst says the wording of the cautionary notice might indicate that someone wants to buy Pinnacle or its operations, although whether this would be through a management buyout or a purchase by an outsider would be pure speculation.
However, he points out that Pinnacle CEO Arnold Fourie has been buying shares in the market.
Between April and May this year Fourie bought approximately 757 000 shares worth about R72 600.
No mention was made in March of a possible delisting when the group released its results for the half-year to end-December 2002.
Fourie did say at the time that the company would use the next six to 12 months to consolidate and integrate various acquisitions and new branches.
"There are no immediate new acquisitions foreseen, but internal restructuring and refocusing into new opportunities will ensure further growth and strengthening of the group," he said.
The group has also previously stated that consolidation in the industry will bring new growth opportunities.
Pinnacle achieved net profit of R3.64 million for the period, up 69% from the previous interim stage.
The group, which was founded in 1987, is a supplier of IT products and services, including computers, peripherals and networking products.
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