Shoden Data Systems has agreed to underwrite and fund partially a new rights offer by Faritec aimed saving the company from collapse.
This comes after talks between Faritec and an unnamed international party, aimed at raising an additional R60m in funding, broke down, casting fresh doubts on the ability of the JSE-listed IT company to survive.
News of the breakdown in discussions comes just three weeks after Faritec told shareholders that the talks over fresh funding were taking longer than expected to conclude.
The company required the funding to implement its “turnaround and growth strategies, normalise trading conditions with trade creditors and ensure adequate working capital to execute its business plan”.
Faritec CEO Fanie van Rensburg says the talks collapsed because certain conditions put on the table by the international company were “not acceptable to certain people involved” in the discussions. He says the international firm walked away from the table.
Now Shoden Data Systems, which holds 51% of Faritec, has been forced to step up to the plate to help fund a new rights offer. Van Rensburg and his management team were locked in talks with Faritec’s second-largest shareholder, black-led IT group Cornastone, on Friday afternoon.
Van Rensburg is hoping Cornastone will join Shoden in backing the new offer.
Though the offer will further dilute Faritec shares, Van Rensburg says he can’t say yet what the scale of the dilution will be. However, the offer is expected to be worth between R60m and R70m. The company’s share price was trading at 4c on Friday.
It’s not yet clear whether Faritec’s third-largest shareholder, J&J, will underwrite the proposed new offer.
However, Van Rensburg is confident Faritec will survive this latest crisis. He strongly denies market rumours that the company will be forced to cease operating following the collapse of talks with the international party.
Van Rensburg says he hopes to provide further details to the market on Tuesday. — Duncan McLeod, TechCentral
- The writer has shares in Faritec