Johannesburg, 29 May 2003
Global Technology Holdings (Glotec) is selling its stake in Swiss-listed Temenos Group for about R51.6 million to various international institutions.
Glotec CEO Ray Leonard says the proceeds of the Temenos sale will be used to reduce debt levels and restructure the balance sheet.
Temenos is a global vendor of banking solutions and Glotec distributes its Globus product throughout Africa.
Leonard says the relationship between the two companies has always been independent of Glotec`s investment and the distribution agreements will be unaffected by the disposal.
Last month Glotec reported a R379 million attributable loss for the year to 31 December 2002. Of that, it said R168 million was related to losses attributable to Temenos and the write-down to current market value of Glotec`s 15% stake in that company.
At the time Glotec`s auditor, Deloitte & Touche, raised an emphasis of matter in an unqualified review opinion on the group`s results, saying Glotec depends on the introduction of new capital and a cost reduction programme currently under way.
Leonard said at the release of the results that the process would eliminate about R76 million in costs per year. The group is also planning to raise more capital through a rights issue, the details of which are still being awaited by the market.
"We made the announcement some while back about our cost-cutting. We`ve obviously felt some of that already but the full amount is only in effect from 1 July."
He says the impact on the balance sheet has been considerable. "Our debt-to-equity ratio is now 1:1, which is a huge improvement, and our total debt now is less than R40 million. That`s a significant turnaround.
"Obviously we no longer have the upside of the Temenos shares, but given the state of the world economies at this point in time, it`s better to be a trader than an investor, so that`s what we`ve concentrated on.
"We`re still under cautionary, so there are other things that we`re doing which will fix up the balance sheet as well."
Leonard says Glotec initially paid about R120 million for a shareholding in Temenos, but had disposed of some of that stake previously.
"All in all, from a straight cash point of view, we won`t have lost any money I don`t think," he says. "In December, because of the diminishing value, we wrote the stake in Temenos down, so now we`ve recouped some of that."
The sale is subject to shareholder approval and Glotec says a circular containing full details of the deal as well as a notice of a general meeting, will be sent to shareholders.
"The board of directors of Glotec is of the opinion that the disposal was essential in order to reduce due and payable debt and recommend that Glotec shareholders vote in favour of the requisite resolution to ratify the disposal," the group says.
Shareholders owning at least 50% of the issued share capital of Glotec have given irrevocable undertakings to support the disposal.
The Glotec share price was unchanged at 7c on the JSE by midmorning today.
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