Telkom has given R1bn in financial assistance to its IT services subsidiary Business Connexion, it said on Monday. The money will be used by BCX, among other things, to meet working capital requirements.
Telkom acquired BCX in 2015 in an all-cash deal worth R2,7bn.
The allocation is in line with a special resolution passed at the annual general meeting of shareholders, which allows Telkom to provide direct or indirect financial assistance to related companies.
The financial assistance to BCX was approved by Telkom’s board of directors for the IT firm to use as working capital, to settle “certain debt commitments” and to provide for future expansion.
“This is aligned with our announced strategy of integrating our enterprise business with BCX as our go-to-market entity providing a truly converged business offering end-to-end solutions to our enterprise customers,” Telkom said on a statement issued via the JSE’s stock exchange news service.
At the same time, Telkom has transferred R155m to Acajou Investments, a 100%-owned subsidiary that houses a new venture in digital gaming. Acajou will be renamed to Digital Gaming League Holdings.
“The board confirms that immediately after providing the financial assistance, the company continues to satisfy the solvency and liquidity test as contemplated in section 4 of the Companies Act.”
It said the terms and conditions of the financial assistance are “fair and reasonable” to Telkom.
In the same statement, Telkom said it has established a centralised group treasury function that will help it fund its operations and grow in the “most efficient and effective manner”. — © 2016 NewsCentral Media