Publications
Partners
Johannesburg – Faritec, an IT group that suspended shares on the JSE late April said on Tuesday that it had filed for the liquidation of Faritec Enterprise Solutions, its wholly owned operating subsidiary.
The liquidation filing brings to an end frantic attempts by the IT firm to raise R60m aimed at rescuing the company from financial ruins and implementing its restructuring plan.
Faritec said on Tuesday it had been unsuccessful in raising "the necessary funds to implement their turnaround strategy".
In its capacity as a creditor of Faritec Enterprise Solutions, the company said it had filed for the liquidation of this unit.
On April 30, Faritec requested the JSE to suspended the trading in its shares with immediate effect, saying its board "is concerned that it may not be in a position to ensure the confidentiality of unpublished price sensitive development or to ensure that the market is adequately and timeously informed of any and all price sensitive developments as these occur".
Faritec said then its working capital was under pressure and it remained in a "precarious financial position".
It also said then it was in discussions with a management consortium and Tabara Investments to raise R30m in capital.
The proposed offer involved an arrangement in which Faritec Enterprise Solutions and its unsecured creditors were to be issued one ordinary Faritec share at a price of 1 cent for each 1 cent of debt they are owed by Faritec Enterprise Solutions.
On April 26, Faritec announced that Faritec, Shoden Data Systems and the Management Consortium had agreed not to proceed with the implementation of the partially underwritten rights offer.
Shoden and certain members of the Faritec management team would have underwritten R30m of a R60m rights offer.
In terms of this proposed offer, creditors were to be asked to either convert their debt to Faritec equity.
Faritec began its effort to raise additional R60m late last year. In their commentary accompanying full year result to June 2009, auditors said Faritec incurred a net loss for the period of R159.5m.
Auditors said the group continues to incur losses, and this had resulted in a cash flow restrictive trading environment, which had restricted the group's ability to trade at normal operating levels.
"In order to sustain the operations and expedite the turnaround and growth strategies of the group additional funding is therefore required," the auditors said.
- I-Net Bridge
