JSE-listed telecoms and IT solutions provider FoneWorx has received undertakings from shareholders holding 52.8% of its stock that they will support its buy-back of the Industrial Development Corporation's (IDC's) stake.
In the middle of last month, the group said it would buy back the IDC's 30% holding and sell it to Isaac and William Kirsh (the Kirsh family), at the same price. FoneWorx will buy, and sell, the shares at 130.81c. Its stock closed at 165c yesterday, a 10c or 6.45% gain on the day.
FoneWorx says it has obtained written irrevocable undertakings from shareholders holding 52.8% of its stock, who will vote in favour of the deal. Stripping out the IDC and the Kirsh Family Trust, which cannot vote on the transaction at the general meeting, the undertakings account for 78.5% of FoneWorx's issued shares.
Entrepreneurs Issie and William Kirsh will join FoneWorx as strategic, value-enhancing shareholders, the listed group says. The family's investment in FoneWorx aims to create a growth platform, with the intention of aligning FoneWorx with the Kirsh family assets.
Issie Kirsh founded radio station 702 in the early 1980s, and his son, William, flipped the station into what is now Primedia, which was founded in 1994. The media group listed in 1995 before being delisted after a private equity buyout in 2007.
New strategy
Smith adds the group is “pleased” it has been able to replace the IDC, which has been “a supportive shareholder, with Issie and William Kirsh, who the company can look to to unlock further value in FoneWorx and pursue a new growth strategy”.
The IDC has been a passive shareholder, according to Smith. FoneWorx expects a new strategy for the group on the back of the deal, which marks the first step in the development of a strong strategic relationship between FoneWorx and the Kirsh family's interests.
FoneWorx's strategic relationship with the Kirsh family will be consumer focused, backed up by IT platforms. The listed company has five operating entities, including BizWorx, which focuses on business-related products, and MediaWorx, which provides information and entertainment services.
William Kirsh says: “My dad and I are delighted to become strategic shareholders in FoneWorx and are very privileged that the CEO and directors chose us as their strategic partners.”
FoneWorx has grown its turnover 50% and earnings 22% over the last six years and has about R100 million in cash.
After the deal, the Kirsh family will own 33% of FoneWorx and the balance of the shareholding is mostly owned by the directors of the company. However, the Kirsh family can require FoneWorx to buy back the 30% stake within six months of the effective date.
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