Total Client Services (TCS), which has been eagerly awaiting the implementation of the much-delayed Administrative Adjudication of Road Traffic Offences (Aarto) law to come to effect, is going into business rescue.
In a statement issued on Friday, the group says it is "financially distressed", because 2 450 shares, issued to Mvelaphanda Holdings, must be redeemed on Friday. The news sent its stock into freefall, wiping 50% off the share price, which closed at 1c.
TCS says it has decided to move ahead with business rescue proceedings as it believes the company can be rescued from its "current financial difficulties".
The group will file a resolution with the Companies and Intellectual Property Commission, and inform shareholders when proceedings kick off.
TCS has been battling financially for some time. In the year to February, revenue dropped 9% and its loss widened 67%. For the six months to August, figures that should have been published on Friday, it expected its loss per share to leap to between 2.04c and 2.2c, from 0.79c.
Since the start of the 2013 financial year, it has been focused on trying to extract maximum value from its current contracts, and has developed solutions and entered into joint venture agreements with "reputable organisations" to grow its offering to new and existing clients, it has said.
"This will enable the group to penetrate into other markets and thus diversify from a risk point of view. The group is well positioned to deliver on this strategy."
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