Shareholders in JSE-listed Vox Telecom will vote in a month over whether a proposed R499 million buyout should go ahead.
In the middle of July, the alternative telecoms provider said it had received a R499 million buyout bid from a consortium comprising the Lereko Metier Capital Growth Fund and Investec Bank.
In its circular to shareholders, posted on Friday, Vox explains the bid will see it delisted on 29 November, if the deal is successful. The company explains it will be better able to focus on its strategy without being encumbered by listing requirements.
In the circular, Vox says the last three years have been challenging for several reasons, including a negative perception of small-cap companies, which was exacerbated by the economic fallout from the global financial crisis. This led to low levels of trading in the company's stock, it says.
Vox adds its share price has performed poorly, limiting its ability to conclude deals, removing value from employee share incentive schemes and negatively affecting employee morale.
The company's share closed unchanged at 45c on Friday.
New strategy
In addition, Vox says it has needed to amend its strategy due to changes in the regulatory environment, which resulted in lower mobile termination rates.
Profit growth in the first half of the year to February was hampered by a 29% drop in call termination rates in March last year, which contributed to a revenue decline of 11% and a slight drop in net profit.
However, the company is shifting its least-cost routing (LCR) minutes to its Cristal Vox offering, which runs on its own network. Once Vox has moved its LCR customers over to Cristal, it will have higher margins, which will flow through to improved profitability.
CEO Doug Reed has said the main reason behind the move is that the company has many businesses in the start-up phase. Vox is competing against other private companies and would benefit from not having the short-term pressures of reporting results every six months, said Reed.
Vox's circular says the consortium supports its strategy and believes “it will be best achieved in an unlisted environment where management can focus on delivering the new strategy without distraction, particularly as there is a potential for an impact on short-term profitability as this change is implemented”.
So far, the consortium owns 441.8 million shares, equivalent to 39.85% of Vox, up from the 36.9% it had earlier this month. The Lereko Metier Capital Growth Fund had an existing 24.8% stake.
Shareholders can opt to keep their investment in Vox, swapping 10 shares in Vox for one in the consortium. Shareholders also have the option of selling some shares and swapping others for a stake in the consortium.
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