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Faritec 'unaffected` by court order

By Iain Scott, ITWeb group consulting editor
Johannesburg, 21 Apr 2006

An interim court order against Enterprise Connection will not affect Faritec`s R54 million acquisition of the company, says Faritec Holdings CEO Simon Tomlinson.

The Enterprise Connection purchase is to double Faritec`s size, with the combined entity expected to achieve revenue of more than R750 million and earnings per share of 7.4c for the year to June.

Faritec says in a cautionary notice that "certain parties" who assert they have a claim against Enterprise Connection have obtained an interim court order which, among other things, interdicts the implementation of the acquisition until 30 May.

It adds that on that date the interim order will either be confirmed or set aside.

Tomlinson says that what is under dispute is a transaction undertaken by Enterprise Connection in the previous financial year. As Faritec was aware of the dispute, it excluded that transaction from it acquisition of Enterprise Connection.

"The numbers we`ve used exclude this deal completely, so there is no financial effect on Faritec," he adds. "The whole deal has been ring-fenced."

Tomlinson says he believes the claimants named Faritec and the JSE in the application simply in a bid to force a settlement.

Competition Commission

"It`s unfortunate that the JSE was named, because this meant the JSE forced us to issue a cautionary. But it`s not material and we are very confident that we will overturn this. We are still looking at a closing date at the end of May."

He adds that the acquisition is still conditional on shareholder and competition authority approval.

"A circular will be sent to shareholders in two weeks, and after that there will still be 21 days before they can vote on it. And we don`t expect Competition Commission approval before May."

The dispute is thus unlikely to delay the acquisition, Tomlinson says.

Enterprise Connection, a technology infrastructure solutions provider, is 50.1% owned by private equity firm Canal Square, which bought its shareholding from Connection Group in the first half of 2003. That followed Connection Group`s decision to exit IT and focus exclusively on its retail operations.

The balance is held by management.

Faritec announced in February that the deal had been concluded and the integration of the companies was expected to be completed in June.

Related stories:
Faritec, Enterprise Connection close deal
Faritec to buy Enterprise Connection

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