Faritec`s R54m purchase held up

By Iain Scott, ITWeb group consulting editor

Johannesburg, 13 Jun 2006

JSE-listed Faritec`s R54.1 million acquisition of Enterprise Connection has been delayed as a result of a third party`s legal action against Enterprise Connection.

Faritec announced in April that the unnamed party had obtained an interim court order that, among other things, interdicted the Enterprise Connection acquisition until 30 May.

On that date, the interim order was to have either been confirmed or set aside.

However, Faritec`s directors say the return date has been postponed to 21 June, which means the acquisition cannot be implemented before then.

Faritec CEO Simon Tomlinson has said the dispute centres on a transaction undertaken by Enterprise Connection in the previous financial year. As Faritec was aware of the dispute, it excluded that transaction from its acquisition of Enterprise Connection.

As a result, the deal had been ring-fenced and the claims had no financial effect on Faritec.

Force a settlement

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

Faritec directors say Faritec and Enterprise Connection have submitted answering affidavits and have also concluded various addenda to the acquisition agreement, mainly to extend the dates for the fulfilment of the conditions to the deal.

Enterprise Connection owns a 25.1% stake in nVisionIT, a Microsoft solutions partner. Faritec says the agreement allows for the acquisition price to be cut to R50.6 million should nVisionIT`s remaining shareholder not consent to the transfer of the stake to Faritec as part of the acquisition.

"Faritec and Enterprise Connection are engaging with the remaining shareholder in nVisionIT and are confident that Faritec will acquire the shares in nVisionIT," the group says in an update issued after the market closed last night.

It also says Enterprise Connection has informed it is confident the interim court order will be set aside on the return date.

Faritec`s share lost ground this morning, trading 7c or 8.9% down at 72c by 9.41am.