Prism Holdings Limited has secured R55 million in underwriting for a rights issue to be conducted by the company in January next year.
The underwriting consortium - led by one of Prism`s original funders, Archway Technology Venture Capital Fund - will inject R55 million into the company immediately as an interest free loan, pending the rights issue to which Prism`s core management team has committed R10 million.
The funds raised will be used to meet working capital needs arising from strong uptake of the company`s products - particularly in South East Asian markets where demand for Prism mobile commerce technologies is exploding. Orders valued at well over R100 million have been achieved in the past six months and more are in the pipeline. The money will also be used to strengthen the group`s balance sheet.
Prism group CEO Alvin Els says these arrangements address market concern regarding the working capital needed to sustain the secure electronic payments company`s impressive growth record over the last six years.
Els points out that the current weakness in the rand is also working strongly in the group`s favour as over 65% of Prism revenues are generated in hard currencies offshore.
Reacting to the commitments from underwriters and management, Els says: "We are encouraged that, notwithstanding a weak share price and adverse tech sentiment, our core shareholders are supporting Prism. It`s especially gratifying to see our original pre-IPO funder Archway back in the fold.
"The management team`s personal financial commitment to the rights issue is also very significant. We have a fundamental belief in the strength of the Prism business. None of us has sold stock, partly because we have always considered the price too low. More importantly because we firmly believe that our future as a provider of our own intellectual property to the global market has yet to reach its real potential."
Els is quietly optimistic about the company`s expected financial performance over the remainder of the financial year to June 2002.
"At sustainable tax rates of 25% our headline earnings per share last financial year were around 27c. Despite the commercial impact of the delays in raising this much needed growth capital, and the dilutory impact of issuing a large number of new shares at this low price, we are confident we will see measured growth in profits resulting in headline earnings per share similar to this figure," he adds.
Earlier this year, investors reacted negatively to news of the last-minute collapse of a black economic empowerment (BEE) deal, which would have raised significant working capital for Prism.
"Despite the fact that we have now raised all the cash needed to operate the company comfortably for the next 12 months, we nevertheless remain committed to concluding the right BEE deal for Prism," Els concludes.
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JSE-listed Prism Holdings is a world leader in the secure electronic transaction market. With a growing presence in Europe and South-East Asia, Prism is one of the few companies in the world offering services solutions and products that bridge the following core technologies:
Security - sophisticated cryptographic security solutions, many developed using own intellectual property resources;
Payment solutions in the physical and virtual (Internet and wireless) realms; and
Smart card technologies spanning both wireless communications and electronic payments.
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