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IT services group EOH [JSE:EOH] has announced it has revised its BEE equity transaction with investment holding group Lebashe to R1bn, in a deal which is set to make the company the largest majority black-owned in the technology sector.
On Monday, EOH said Lebashe’s equity investment which was initially set at R250m, will increase to R1bn, in a transaction subject to regulatory and shareholder approval.
This also means that the previously proposed R3bn debt facility offered by Lebashe to EOH will no longer be necessary, the company said in a statement.
EOH's Zunaid Mayet, who has relinquished his role as chief executive officer of EOH to head Nextec, the company’s new business unit, described the deal as an “important milestone” for the technology sector’s transformation.
“The amended deal structure will significantly enhance EOH’s BEE credentials, while providing growth capital that will benefit the group in the long-term,” said Mayet.
Under the strategic partnership, EOH will issue 40 million A class shares to Lebashe for a subscription price of R1, and the initial subscription will be issued by Lebashe subscribing for new EOH shares for a cash consideration of R250m.
Both companies say the deal would serve a significant equity injection, and will see Lebashe utilise its own financial resources to subscribe for the new shares.
The transaction would increase EOH black shareholding to over 50%, in a partnership described as its “commitment to transformation and strengthens its competitive positioning in the market”.
The transaction comes as Stephen Van Coller, a senior executive at pan-African telecommunications company MTN Group and the former head of Absa Group’s investment-banking division, will take over the helm at EOH, reports Bloomberg.
The technology company is taking steps to improve its governance and turn around its performance after the stock fell to the lowest since November 2011. This includes splitting into two separate business units that will be overseen by a holding company from August, according to Bloomberg.
Lebashe, a Johannesburg-based 100% black-owned investment holding company which holds a stake in Capitec Bank, was recently party to a court action instituted by UDM leader Bantu Holomisa.
In a series of letter to President Cyril Ramaphosa, Holomisa alleged that the firm has inappropriately benefitted from the Public Investment Corporation funding.
Early this month, Lebashe and other empowerment companies mentioned in the application, Harith General Partners and Harith Fund Managers obtained an order preventing Holomisa from further making the allegations.
The politician has revealed that he plans to appeal the order.
EOH shares were trading down 1.38% at R40.86 by 11:50 on the JSE.
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