Net1 chief not re­spon­si­ble for ter­mi­na­tion

The Star Early Edition - - NEWS -

NET1 UEPS (Uni­ver­sal Elec­tronic Pay­ment Sys­tem) Tech­nolo­gies said on Fri­day that newly-ap­pointed chief ex­ec­u­tive Her­man Kotzé was not re­spon­si­ble for ter­mi­nat­ing an agree­ment to in­vest R2 bil­lion in Blue La­bel Tele­coms in a bid to ac­quire a 15% stake in Cell C.

This af­ter Net1 an­nounced on Thurs­day that it in­tended to pur­sue in­vest­ments in Cell C and DNI-4PL Con­tracts, but that it would no longer be in­vest­ing di­rectly in Blue La­bel Tele­coms.

Kotzé, Net1’s for­mer chief fi­nan­cial of­fi­cer, was last month ap­pointed to lead the par­ent com­pany of wel­fare grant pay­ment provider Cash Pay­mas­ter Ser­vices (CPS) af­ter Serge Belamant re­signed fol­low­ing pres­sure from ma­jor share­holder Al­lan Gray.

“The board of Net1 wishes to clar­ify that its re­cently-ap­pointed chief ex­ec­u­tive did not uni­lat­er­ally ter­mi­nate the sub­scrip­tion agree­ment with Blue La­bel. The de­ci­sion was made by the full Net1 board be­fore the end of May,” Net1 said in a JSE an­nounce­ment.

Net1 was a party to the um­brella re­struc­ture agree­ment with Cell C, in which it was go­ing to buy a 15% stake in Blue La­bel Tele­coms worth R2bn, while in turn, Blue La­bel was to buy a 45% stake in Cell C for R5.5bn.

The sale of stakes in Cell C is part of an on­go­ing ef­fort to slash the mo­bile op­er­a­tor’s debts from R20bn to R6bn.

Net1 said the pro­posed three in­vest­ments re­quired the util­i­sa­tion of cash re­serves, bank fi­nance and the is­suance of shares of its com­mon stock to fund the trans­ac­tions.

Net1 said the ma­te­rial re­duc­tion in its share price in the first five months of this year and the lack of vol­ume de­mand for its shares would have made it detri­men­tal to its share­holder value for it to pro­ceed with a share place­ment.

The com­pany would now use sur­plus cash and debt to pur­sue the ac­qui­si­tion.

“The board ac­cord­ingly con­cluded that Net1 could only use cash re­sources and bank debt and could, there­fore, only con­clude two of the three in­vest­ments,” Net1 said.

“Net1 ap­proached Blue La­bel on these matters and both par­ties mu­tu­ally agreed that Net1 would not sub­scribe for shares in Blue La­bel and would pro­ceed only with the in­vest­ments in Cell C and DNI. Blue La­bel would re­place the Net1 sub­scrip­tion with a pri­vate place­ment with other par­ties to part fund its in­vest­ment in Cell C.”

Net1 is cur­rently at the cen­tre of the con­tro­versy around the dis­tri­bu­tion wel­fare grants pay­ments in South Africa af­ter an af­fi­davit by au­dit­ing firm KPMG re­vealed that it made R1bn in profit from its un­law­ful con­tract with the South Africa So­cial Se­cu­rity Agency (Sassa) over a pe­riod of five years.

Net1 sub­sidiary CPS ad­min­is­ters the so­cial grants pay­ments of more than R140bn to more than 17 mil­lion ben­e­fi­cia­ries. – ANA

The de­ci­sion was made by the full Net1 board

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