The JSE-listed Siltek group is to enter provisional liquidation after negotiations on a capital restructuring bid apparently failed.
According to reports, the Siltek warehouse in Midrand was closed this morning and all shipments have been suspended with immediate effect. Staff members have been informed, in writing, that their salaries for the current month will be paid.
The company has called an emergency news briefing to be held this afternoon.
Siltek shares were suspended last week after the company said it would delay reporting its latest set of financial results until the capital restructuring negotiations had been completed.
While the group is not commenting ahead of this afternoon's press briefing, CEO Dave Lello said recently that the cost of the money the group has been putting into distribution is about six times that of a similar business in Europe.
"The question everybody is asking is if Siltek in its current state has the money to finance a business that is so cash-negative," he said.
The group previously attempted unsuccessfully to source financing overseas.
Michael Aitken, MD of Siltek Telecoms, says plans for a management buy-out of that division are well underway.
"We and our merchant banker will be seeking an audience with the liquidator as soon as possible to talk about a deal," he says.
An unconfirmed rumour also has it that Lello may lead a management buy-out of the profitable sections of the group, including subsidiaries Chemetrix, Workgroup and Siltek Healthcare. Also likely to be included in such a deal is the consumables side of flagship Siltek Distribution Dynamics (SDD), but not the PC and other hardware side of its business.
Siltek recently decided to place its Australian operations under voluntary administration after continued losses resulting from what the group said was a downturn in demand for IT products in Australia.
A long history
The group, founded in 1949 as Trade & Industry Acceptance Corporation, was renamed after acquiring Siltek Investments.
Grinaker Holdings held 65% of its ordinary shares, with the ultimate holding company being Anglovaal Holdings.
SDD, which provides 60% of the group's revenues, was formed in 1994 through the merger of four Siltek organisations - HiPerformance Systems, M&PD, Softsource and Electronic Back-up Services.
In 1998, Anglovaal sold its Siltek stake to empowerment company Kunene Technology, which held a 20.58% shareholding in Siltek.
Siltek restructured in 1999 to focus on the technology supply chain and software and services. A decision to sell off non-core businesses led to a large number of disposals over the next two years.
Last year a number of management changes saw deputy chairman Lello being appointed CEO and Kunene announced it would unbundle its stake.
ITWeb will report on this afternoon's press briefing later today.
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SDD safe but Siltek subsidiaries may go
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