As part of the deal, a minimum loan facility of R10 million will be provided, a portion of which is convertible into equity. This has been earmarked specifically for business expansion. The deal follows the successful conclusion of Brainware`s restructuring exercise and is expected to rebuild investor confidence in the group. Brainware is now ready for disciplined, consistent growth at manageable levels.
The arrangement is in line with key objectives of establishing strong institutional support for Brainware. It will result in a strengthening of the balance sheet and a reduction of the number of shares in issue.
Christo Scholtz, executive director of Rock-IT and previous managing director of Dimension Data Telecommunications and Plessey South Africa, has been appointed non-executive chairman of Brainware. Rock-IT CEO, Nic Venter has been appointed advisor to the Brainware board.
Brainware CEO J.C. van Niekerk says: " Christo Scholtz (40) has achieved real stature in the business world and brings with him enormous commercial acumen and experience."
Speaking of Brainware, Scholtz said Rock-IT has confidence in Brainware`s current top management and believes the business has substantial intellectual resources, unique services and the extra degree of entrepreneurial flair necessary for real success.
Scholtz said that the medium term strategy is to re-build and grow the company. Rock-IT executives have experience in both the corporate and entrepreneurial worlds and will assist Brainware to broaden its revenue base and become an industry leader.
He said: " Rock-IT identified real value in the refocused, restructured Brainware group. Our involvement is not just a case of funding, but of adding value through active participation in Brainware`s business. I am confident that the group will achieve sustainable, significant growth over the next few years. We look forward to unlocking the group`s potential and rewarding vendors, staff and investors."
CEO J C van Niekerk said that as Brainware had "taken the pain" of restructuring up front, shareholders should not anticipate strong results for the interim period to December 1999. However, in view of the restructuring, new product development and difficult trading conditions, the results should be better than might have been expected, particularly relative to other players in similar circumstances.
He continued: "With operations now organised in four divisions - Consulting, Technology, Applications and Health, the group is leaner, flatter and more focussed with real synergistic opportunities. The building blocks are now in place to capitalise on Brainware`s unique strengths."
The trading environment has also greatly improved for Brainware`s developed software which had been rolled out for the administration of medical funds, tertiary educational institutions and pension funds.
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