EOH Holdings is about to embark on a rights offer, seeking up to R600-million from its long-suffering shareholders as it moves to deal with the unsustainable debt on its balance sheet.
At the same time, the share price – R3.10 at the time of publication – has fallen to levels last seen in early 2020, soon after the start of the Covid-19 hard lockdown sent equity markets crashing.
Is it all bad news at EOH, or is the market overreacting?
Stephen van Coller, EOH’s group CEO, joins TechCentral’s Duncan McLeod in the TC|Daily studio to unpack the debt problem EOH faces: how bad is it, how much is it spending to service this debt, and what happens if the rights issue is not a success?
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Van Coller, who joined EOH from MTN Group, says getting the capital structure right will put the IT services group on a sustainable footing for profitable growth. Could that mean a rerating of the share price, too?
In this episode of TC|Daily, Van Coller unpacks:
- The timelines for the rights issue, what shareholders are being asked to do.
- Whether EOH will need to sell more businesses, and investor concern that if it does it’ll be cutting into muscle rather than fat.
- Whether the entire EOH business could be put for sale.
- The profit margins that EOH can reasonably expect in the longer term.
The conversation then turns to the legacy corruption issues at EOH. Here Van Coller tackles several thorny issues, including:
- The civil suits against former directors, including ex-CEO and co-founder Asher Bohbot, how these suits are progressing, and their chances of success.
- Whether we are likely to see criminal prosecutions against former EOH executives anytime soon.
- The recent settlement with the Special Investigating Unit over corrupt dealings at the department of water & sanitation, and whether there are any other legacy issues that could cost EOH money.
- EOH’s relationship (or lack thereof) with Microsoft.
Lastly, Van Coller talks about his time at EOH – and why he would not have taken the job if he’d known he’d be spending his time cleaning up a nest of corruption. He also tells TC|Daily what he may look to do next when he eventually moves on from the company.
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