Green light for AST merger

By Iain Scott, ITWeb group consulting editor

Johannesburg, 15 Mar 2005

AST`s shareholders have approved the group`s merger with Gijima Technologies and AST Group`s subsequent change of name.

As a result, the group plans to begin trading on the JSE under the name of Gijima AST Group from the morning of 22 April. The JSE share code will change from AAA to GIJ.

AST says its shareholders have approved the resolutions relating to the merger, the name change, and the exercise of a partially underwritten rights offer.

The rights offer of R160 million was to be underwritten to the amount of R116.75 million. Subsequently, Allan Gray, as an authorised agent for "certain investors", has agreed to underwrite the offer to the amount of R43.25 million, resulting in the rights offer being fully underwritten.

The purpose of the rights offer is to raise extra capital to allow AST to pay off some of its debts and boost its working capital.

"The resolutions approved in the shareholders` meeting represent a major step in the reconstruction process which AST`s management team began in December 2002," says CEO John Miller.

After debt levels grew out of hand, the AST Group in December 2002 instituted a "business improvement programme" aimed at improving profitability and restoring the balance sheet to health.

The programme involved job cuts, shedding non-core businesses and implementing other cost-saving measures.

Miller said in September that the business improvement programme had been completed, but most of the benefits would be evident only in the year to June 2005 and onwards.

Commenting on the Gijima deal, he says while Gijima and AST focus on similar sectors of the ICT market, their offerings and client bases are complementary.

The deal also allows the group to approach both public and private sectors with substantially improved black empowerment credentials. Gijima will own at least 32% of the group.