ITI Technology Holdings` shares have been suspended and the board is weighing up whether to place the company under judicial management or voluntary liquidation.
The surprise announcement comes after the termination of the signed deal for the R88 million sale of ITI subsidiary, Centrocen.
Interim results showed a balance sheet reflecting the cash expected from the Centrocen deal, which amounted to R37 million. With the deal falling through, the sizeable amount of capital will not be forthcoming and the company finds itself unable to continue operations in the current situation.
ITI announced the resignation of Gerrie Coetzee as group CEO on 30 May. Coetzee was replaced by Frank Arico, founder and former MD of ITI subsidiary Computer Related Services (CRS).
"We are taking legal opinion and calling in our auditors regarding the matter. It is a holding company problem; our subsidiaries are still performing very well," says Arico.
ITI restructured into two divisions: software business solutions, comprising SCManager, Emerging Technology Solutions (ETS) and CRS; and services solutions, comprising Edgetec.
"If we had the cash from the Centrocen deal we would have been able to continue as usual. Our commitments from before the restructuring still remain, and overheads and leases still have to be met."
Arico says the subsidiaries of the restructured ITI are performing well, with the exception of US-based ETS.
"ETS is performing below expectations which has also hampered our dollar revenue," says Arico.
Speculation within the market abounds as to the timing of Coetzee`s resignation. Sources close to the company attribute Coetzee`s decision to the stress of the restructuring.
Staff numbers at ITI dropped from 600 to 200 during the restructuring process. This was coupled with the knocks that the ITI share price has taken, falling from 700c in June 1988 to 56c in mid-May last year.
Arico says "the patient has not been buried but is far from healthy" and he is open to negotiation with respect to resurrecting a possible sale of Centrocen.
"The Centrocen deal was signed subject to certain conditions. These conditions have caused problems and it is because of this that the deal has fallen through."
According to Arico, there are a number of possibilities open to the company other than the possible liquidation.
"Management buyouts of the subsidiaries are not out of the question, as well as the restructuring of debt. We will be taking legal advice on this as soon as possible.
"I wouldn`t say it`s all over. I would like to think of it as a temporary respite for the company while we gather our forces."
The JSE has agreed to suspend trade of ITI shares at the request of the board. Shares closed at 7c yesterday.
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