Investors have turned on Pinnacle Holdings, dumping the technology group’s shares for a second day in a row. In late morning trading on Wednesday, the company’s shares were off by more than 20%, extending a rout that began on Tuesday when the share closed down by 25%.
They traded as low as R11,20/share on one stage, down by 44% from Monday’s close of R20/share.
Investors have turned extremely bearish on the company, which until recently was a darling of the stock market. This follows the arrest of its executive director, Takalani Tshivhase, for allegedly trying to bribe a top police official in an effort to secure a lucrative contract.
Tshivhase was arrested by the Hawks on 5 March for allegedly attempting to pay a bribe of R5m to a lieutenant-general in the police’s technology division to secure a tender to supply technology equipment. He appeared in the Pretoria specialised commercial crimes court on a charge of corruption on was released on R10 000 bail.
The case is set to be heard on 24 April. Tshivhase, through Pinnacle, has denied guilt and said he intends defending the matter.
Investors are likely worried not only about Tshivhase’s arrest and the claims against him, but also the fact that he sold R4m worth of Pinnacle shares a day before news broke of his arrest. The JSE has now indicated it plans to investigate the share sale.
Shareholders have also expressed concern that Pinnacle failed to disclose Tshivhase’s arrest sooner.
CEO Arnold Fourie told TechCentral on Tuesday that it was not necessary to alert shareholders earlier as it was a “private issue” and not one that affected the company’s financial performance. — (c) 2014 NewsCentral Media