Diverse technology group IST today issued a profit warning saying it had burnt up R35.3 million in cash during the past year, in efforts aimed at growing its businesses.
However, Ethos Private Equity says the news will not deter it from going ahead with its planned offer to buy out IST minority shareholders for 180c per share, which equates to between R250 million and R300 million as the final payment.
The IST statement says earnings per share and headline earnings per share for the interim period ended 31 August are likely to be at least 30% lower than the results posted for the year ended 29 February 2004.
For that period IST posted earnings per share at 19.1c from 18.6c in 2003 and headline earnings per share were 18.4c compared with 18.5c before.
In its annual report for 2004, IST said it would spend on trying to generate more business in an effort to offset delays for the proposed Pebble Bed Modular Reactor that has been on the cards since the early 1990s. Financing for what would be SA`s second nuclear power station has been difficult to come by and environmental concerns have also weighed on the project.
Due to this spending, the group now has a cash overdraft of around R3 million.
Ethos Private Equity partner Shaun Zagnoev says his company will continue to pursue its plans to make an offer to minority shareholders.
"We have started a legal process and a circular will be posted soon to the shareholders detailing our offer," he says.
Zagnoev says his company has had some discussions with key shareholders, and the details will be contained in the circular.
The IST shareholders` annual general meeting is due to be held in September when the Ethos offer will be tabled. The date for the meeting should be announced this week.
In a separate media statement, IST said its current black economic empowerment (BEE) structure is due to unwind and consequently the board has decided to recommend the Ethos proposal.
In terms of the BEE arrangement established in 1998 between CNI/Aka Capital and Sanlam/Gensec, this structure will be unwound later this year with the shares reverting to Sanlam/Gensec.
Initially the IST board had hoped to buy back these shares to create a new BEE structure that would own 25%. However, IST says it has failed to secure the necessary funding.
Share