EOH said on Monday that its shares went into freefall last week, tumbling to as low as R26.55, because of the forced sale of shares by financial institutions against equity-financed transactions to various individual shareholders, including two directors of the IT services group.
In a statement on the JSE’s stock exchange news service before markets opened on Monday, EOH said the forced sale led to unusually high volumes of shares being traded.
“EOH confirms that the directors affected did not voluntarily sell their shares, but rather that the sale was caused by margin calls against these equity-financed transactions,” it said. The directors affected were Jehan Mackay and John King, the chief financial officer.
“Separately, as published previously, EOH has finalised the sell-back agreement in order to unwind its acquisition of Grid Control Technologies, Forensic Data Analysts and Investigative Software Solutions, which it acquired in November 2015.
“EOH had been in discussions with the previous shareholders of the above-mentioned companies for some time about unwinding the transaction. These discussions were initiated as a result of a significant underachievement against performance warranties.”
It said recent media allegations related to Keith Keating, director of the three companies being unwound, “caused EOH to expedite the unwinding and conclusion of the sellback agreement”.
“In view of the allegations and in the interest of good governance, EOH has appointed (law firm) ENSafrica to conduct a full fact-finding review of the commercial activities of the three companies mentioned above,” it said.
‘Independent oversight’
“In keeping with the group’s zero-tolerance commitment, it will act against any identified wrongdoing or misconduct involving any individual or entity. To further strengthen EOH’s corporate governance, material public-sector engagements and contracts will be subject to independent oversight by ENSafrica.”
It said the decision to contract with ENSafrica is in addition to the internal compliance measures adopted by EOH’s audit committee in July, which includes a review of the group’s governance framework and all material public-sector contracts. This review is “well under way”, it said. — © 2017 NewsCentral Media
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