Accounting, payroll and tax software group Softline is to pay its investors 130c a share and terminate its JSE listing following a management buyout.
A consortium consisting of senior management members, non-executive directors and Investec Bank has been in talks with Softline and says it intends to present a firm proposal to acquire the entire undertaking of the group.
Softline CFO Rob Wilkie says Softline has been the subject of negative market perception for some time and is seen as a small-cap stock that is not on the radar screens of major institutional investors.
"We don't expect sentiment to improve in the future, so we see this deal as an opportunity to extract value for shareholders," he says.
Wilkie says the delisting is "certainly a symptom of a bear market. I don't think we would have considered this two years ago when the share was at R5. And you may see some more delistings by other companies."
"While it is hard to determine what the future holds, I believe it is highly unlikely that Softline would return to the JSE when the market improves."
Softline has issued a detailed cautionary notice saying that once the deal becomes unconditional it intends to distribute the net proceeds to its shareholders and delist from the JSE. The payout is expected to be around 130c a share.
The share, which closed at 117c yesterday, had risen to 124c by noon today.
Investor relations director Lara Jawitz says the 130c offer represents a 38% premium to the 94c at which the share closed before the first cautionary was issued on 5 February.
"Had we not put out a cautionary the share would still have been around 90c to 94c," she says.
The offer also represents a 30% premium to the group's net asset value of R1 a share at the end of January and a 120% premium to the tangible net asset value of 59c.
The proposal is subject to various conditions, including the approval of the loan funding by lenders Investec and Rand Merchant Bank.
Other conditions include the satisfactory outcome of a due diligence investigation by the lenders, which is under way, as well as regulatory and shareholder approval.
KPMG Services has been appointed to conduct an investigation to determine whether the proposal is fair and reasonable and has begun its work in this regard.
Softline says a further announcement will be made on or around 19 May. Wilkie says the final price tag, the identity of the shareholders and the size of their shareholding will be announced once the deal is finalised.
Softline was co-founded by Ivan Epstein, Steven Cohen and Alan Osrin in 1988. In 1989 it launched the Brilliant Accounting software brand.
The group listed on the JSE in February 1997 and in the following year expanded into the US, UK and Australia. Among its acquisitions that year was South African accounting software company Lorge Consulting. In February 1999 it bought Pastel Software.
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