Companies owed money by Faritec will have to opt for shares in the troubled JSE-listed IT group, or risk losing the money they’re owed.
The group, which is fighting to stave off closure, plans a fresh R60m rights offer to raise the cash it needs to continue trading.
Faritec’s largest shareholder, Shoden Data Systems, and “certain members of the Faritec management team” have committed themselves to contributing R30m of new equity into the company by underwriting partially the new rights offer.
The management consortium consists of the group’s directors, as well as certain other people “interested in coming into it”, says Faritec CEO Fanie van Rensburg (pictured).
The group’s two other large shareholders, J&J and Cornastone, have elected not to underwrite the offer, but may follow their rights later, Van Rensburg says.
The proposed rights offer, which management hopes will raise up to R60m in working capital, is subject to a range of conditions.
These conditions include the implementation of a scheme of arrangement between group subsidiary Faritec Enterprise Solutions and its creditors. In terms of this arrangement, “the various classes of creditors will be asked either to convert their debt to Faritec equity or compromise their debt”.
“On receipt of sufficient irrevocable undertakings from creditors to support the scheme, Shoden and the management consortium have agreed immediately to advance R30m to Faritec as a bridging loan, pending the implementation of the rights offer,” the group says in a statement issued by the JSE on Wednesday.
Van Rensburg says he is confident the partial underwriting of the rights offer, coupled with the debt-to-equity conversion, is sufficient to tide Faritec over.
“The balance sheet will be restructured after this, and, absolutely, we’ll have a growing company,” he says.
If the scheme and rights are implemented, management says Faritec will be “well positioned to recover strongly”. “The company will now engage formally with creditors to finalise the terms of the scheme.”
Though implementation “could take about 12 weeks, this will be expedited by obtaining irrevocable undertakings from creditors to cote in favour of the scheme”.
The group says it will announce precise terms of the proposed scheme and the level of support it has received by next Wednesday, 17 March.
Faritec was trading unchanged at 4c/share at noon on Wednesday. — Duncan McLeod, TechCentral
- The writer has shares in Faritec