Home Breaking News EOH Sells R240-m Worth of Assets

EOH Sells R240-m Worth of Assets

EOH said the acceleration of the call option in respect of the remaining 30% will add to its deleveraging programme while giving RIB complete control over the business and allow greater flexibility and autonomy as it navigates the current uncertainty in the global economy.

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Stephen van Coller
EOH CEO Stephen van Coller

JSE-listed technology group EOH has agreed to sell R240 million worth of assets to RIB Limited and owners of LSD Information Technology (LSD).

The deals are in line with EOH’s strategic intent of reducing debt and improving liquidity.

EOH said on Monday it will sell its 30% stake in Construction Computer Software (CCS) to RIB.

The deal is valued at R143 million.

In July 2019, EOH Mthombo sold 70% of its shares in CCS to RIB.

The remaining 30% shareholding in CCS was retained as EOH planned to participate in the growth of CCS through RIB’s broader distribution and development network.

EOH and CCS also entered a reciprocal put and call option in terms of a shareholders’ agreement for the disposal of the remaining 30%of CCS. Additionally, 10% of the purchase price being R44,4 million was held in escrow till 31 July 2021 as security for warranties given and adjusted downwards for any claims made against the Seller in accordance with the terms of the SPA. No claims have been made against this escrow to date

EOH is pleased to announce that RIB has requested an acceleration of the call option to purchase the remaining 30% of the issued ordinary share capital of CCS for R143 million effective no later than 31 May 2020.

EOH said the acceleration of the call option in respect of the remaining 30% will add to its deleveraging programme while giving RIB complete control over the business and allow greater flexibility and autonomy as it navigates the current uncertainty in the global economy.

Additionally, RIB has agreed to bring the warranty period for the escrow amount forward to 30 September 2020 given that there have been no claims to date. The parties will work together to finalise the release of this retention by the due date. The amount held in escrow totalled R46,2 million at 7 April 2020 and will continue to attract interest.

Furthermore EOH, through its wholly-owned subsidiary EOH Mthombo, acquired LSD in December 2017.

LSD specialises in open source technologies and has supported the digital transformation journey of EOH customers.

On 17 April 2020, EOH Mthombo entered into a settlement agreement with the initial sellers in terms of which EOH Mthombo has agreed to transfer all of its shares in LSD to the initial sellers as a full and final settlement of EOH’s outstanding obligations, estimated at R96 million. The settlement agreement amicably cancels the initial acquisition agreement and relieves EOH of its obligations in this regard.

EOH and LSD are committed to ensuring that all customers of EOH and LSD continue to receive the various services offered by LSD. As such, a service-level agreement between the two parties is being finalised.

“The LSD team have, over the past three years delivered fantastic value to our clients and I’m pleased to say that they have confirmed their committed to ensuring that services provided to EOH’s customers are not disrupted or negatively affected,” EOH Group CEO, Stephen van Coller, said.

“In regard to the CCS transaction, both parties believe that given the significant growing uncertainty around global economic conditions due to COVID-19, the transaction is the most prudent approach in the circumstances. I’d like to express my gratitude to both LSD and CCS and wish them the very best in their future endeavours.”

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