EOH to get its house in order
JSE-LISTED EOH yesterday blamed the combined sale of R156 million worth of its stock by two directors last week for the 35 percent plunge in its share price. EOH said that the “extraordinary volume” in the trading had spiked the decline.
The company said it had established that the stock succumbed to the forced sale by financial institutions against equity-financed transactions to various individual shareholders, including two directors.
“EOH confirms that the directors affected did not voluntarily sell their shares, but rather that the sale was caused by margin calls against these equity-financed transactions,” the company said.
The group said Jehan Mackay, the chief executive officer of its public services unit, was forced to sell R127m worth of stock, while John King, its chief financial officer, had to sell R16m.
The explanation was received well by the market, with the stock surging 27.7 percent after the announcement, but lost traction as the day wore on, ending the day 8.54 percent up at R51.58. The company’s shares have, however, tanked 71 percent so far this year.
The rout of the company’s shares came hot on the heels of reports that one of EOH’s subsidiaries was involved in corrupt government contracts.
Details
The Independent Police Investigative Directorate reportedly searched the home of Keith Keating, a director of three businesses owned by the group.
Last month, details emerged in Parliament of graft involving the SA Police Service and the State Information Technology Agency in awarding R6.1 billion in contracts to Keating’s companies between 2010 and this year. Keating has also been accused of facilitating kickbacks and bribes to former acting police commissioner Khomotso Phahlane via money-laundering schemes.
EOH said it was in the process of selling the three companies: Grid Control Technologies, Forensic Data Analysts and Investigative Software Solutions. EOH bought these businesses in 2015 for more than R800m, and Keating remains a director of all three. The deal was subject to profit warranties being met.
It said it had been in discussions with the previous shareholders of the above-mentioned companies for some time about unwinding the transactions.
“These discussions were initiated as a result of a significant underachievement against performance warranties. Recent media allegations relating to Mr Keating caused EOH to expedite the unwinding and conclusion of the sell-back agreement.”