Secure electronic payments company Prism Holdings and Allied Technologies (Altech) have terminated their talks on the R47 million Altech acquisition of Prism TranSwitch Services (PTSS).
Prism Holdings and Altech announced the signing of heads of agreement relating to the deal in October.
Prism CEO Alvin Els says irreconcilable positions, a change in Prism`s trading position and concerns over intellectual property rights resulted in talks being terminated.
"We had planned to use the proceeds from the disposal of PTSS to strengthen our balance sheet by reducing debt and enhancing working capital. Fortunately, this is no longer necessary," says Els.
"In addition, although the value of the deal was agreed, we were unable to reach consensus on restraints or on mechanisms that would ensure the protection of Prism`s intellectual property, much of which underpins PTSS`s operations."
Prism says PTSS is SA`s leading electronic funds transfer and bill payment processing services company, switching over 150 million transactions per annum on behalf of major retailers, utilities and financial institutions.
"Because Prism`s most important asset is its intellectual property, we are obliged to protect it in its entirety. During our negotiations with Altech it became apparent that mutual concerns surrounding intellectual property rights could not be adequately addressed."
He says the decision to end discussions was not taken lightly, and that the Prism board of directors consulted with and obtained the support of major shareholders and key lenders.
Els expects the termination of negotiations to have little impact on Prism`s previously announced recapitalisation process, which will take the form of a rights issue early next year. This will provide the foundation for the company`s refinancing.
Prism will continue to maintain a close working relationship with Altech, which uses some of the company`s cryptographic security and other products, he adds.
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