Listed IT company Square One will be advised to amend its statement to shareholders that there is “no litigation pending against the company”.
This claim is contained in its interim results for the half-year to June, published on the Stock Exchange News Service (SENS), on 30 September.
However, Agang Cabling Solutions still aims to liquidate the company. CEO Deon du Plessis tells ITWeb that a liquidation hearing has been set for 10 November.
Kobus Swart, of Schwarz-North Inc Attorneys, who is acting on behalf of Square One, concedes there is litigation pending against the company, as it is a fact that the group's name appears on the court roll.
He says he will advise the company to issue an erratum indicating that this is the case, even though the company considers the action by Agang to be frivolous and without merit.
Andre Visser, GM of Issuer Services at the JSE, says the bourse will approach the company to determine the facts of the matter and will then decide whether there has been a breach of its rules before looking at what, if any, action to take.
Without merit
Agang's action is based on Du Plessis' claims that the listed group owes him close on R1 million for work he had done for it. In addition, before the money was paid, Square One had offered to purchase Agang through a subsidiary.
Square One denies that it owes the company money, saying Agang's unpaid invoices are against Structured Networks, a company that currently has nothing to do with Square One.
Square One chairman Garth Coetser says the court application is without grounds and is “frivolous”. He says the lawsuit should actually have been filed against Structured Networks, and not Square One.
Coetser says that, as a result, the company did not think it was necessary to tell shareholders about the legal action as it does not have any legal grounding. He concedes there had been an agreement to buy Agang, but this did not work out and the settlement amount for the termination of the deal is currently being held in trust.
But Du Plessis claims Structured Networks is a Square One subsidiary that has been renamed as Structured Infrastructure Solutions. Square One bought Structured Infrastructure Solutions last June, for R12.5 million, through issuing 10.9 million shares.
In June, then Square One CEO Craig Alexander - who has since resigned - said the company had filed its responding affidavits and was confident of vindication in court.
Fighting back
Swart says Agang's case is factually flawed, but, despite this, fighting it has placed a burden on the company as it has incurred costs and spent several hours explaining the matter to clients and suppliers.
He says, as a result, he has been instructed by the company to institute a damages claim against Agang as a result of the disruption to the business.
However, the amount of damages that have been incurred has yet to be quantified. Swart says the company will wait until after the court hearing next month before calculating costs. He explains the company will add the court costs to its damages claim.
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