Why EOH shares went into a frenzy
EOH said yesterday that its shares went into freefall last week, tumbling to as low as R26.55, because of the forced sale of shares by financial institutions against equity-financed transactions to various individual shareholders, including two directors of the IT services group.
In a statement on the JSE’s stock exchange news service, EOH said the forced sale led to high volumes of shares sold.
“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,” it said. The directors affected were Jehan Mackay and John King, the chief financial officer.
“EOH has finalised the sellback agreement to unwind its acquisition of Grid Control Technologies, Forensic Data Analysts and Investigative Software Solutions, which it acquired in 2015.
“EOH had been in discussions with the previous shareholders of the companies for some time about unwinding the transaction. These discussions were initiated as a result of a significant underachievement against performance warrantees.”
It said recent media allegations related to Keith Keating, director of the three companies being unwound, “caused EOH to expedite the unwinding and conclusion of the sellback agreement. In view of the allegations, EOH has appointed (law firm) ENSafrica to conduct a fact-finding review.”
This article was first published on TechCentral.