Spescom has concluded the negotiations it revealed in April and has announced an overseas acquisition.
The deal, valued at $4 million (or about R25 million), buys the company an effective 60% interest in Altris Software in the UK. The balance of the shareholding is in the hands of US-based parent company Altris Software, an electronic document management system developer. The deal also includes a 17% stake in that parent company.
Altris in the US has been accused by its stockholders of the falsification of financial statements, a "fraudulent scheme and course of business that operated as a fraud and deceit on purchasers of Altris stock", and shoddy morality in general. The company`s stockholders filed a class action suit against the company and its executives in 1998 claiming they had been actively defrauded. The case led to the resignation of company chairman and CEO Jay Tanna and caused the stock to be delisted from the Nasdaq exchange. It is now being traded over the OTC Bulletin Board.
A memorandum of understanding signed by Altris in March opened the way for a settlement of $4.2 million, which would see all claims against the company dropped in return. The deal is yet to be ratified by the court.
But Spescom says it has a deal sweetener linked to that ratification. According to the terms of its acquisition, the Spescom stake increases to 24% should the court not approve the deal by 30 September.
Why would Spescom involve itself in such a situation? The reasoning is purely product-driven, says group chief executive Peter Verwer. "The organisation`s document management system fits perfectly into the Spescom knowledge management system."
The instant European distribution network also played a role, as did the American distribution potential. And the controversy surrounding the company has its benefits. "We went in at the right time," Verwer says. "If we waited six months we would have paid considerably more if you look at the contracts it has already signed." He says that although not directly involved, the price of the UK arm was affected by the troubles the parent company experienced.
Verwer also says the American stake was not exactly part of the plan. "It was the way the deal was structured. It was a bonus." He admits that the firm, with its stock under obvious pressure, was desperately looking for a buyer.
The Reserve Bank has already indicated approval of the deal, and Spescom says other conditions have either already been met or will be complied with shortly.
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