Labat to unbundle IT division

By Kimberly Guest for Labat
Johannesburg, 27 Nov 2007

JSE-listed Labat is making progress on its strategy to unbundle its IT division, Labat Traffic Solutions (LTS), into a separately-listed entity.

The company yesterday told shareholders it had successfully negotiated the buyback of interests from minority holders in partly-held Total Computing Services.

It also noted that the division had received approval to list on the JSE`s Alternative Exchange (AltX) under the name Total Client Services. This listing is scheduled for February 2008.

Complex deals

The proposed "amalgamated" company is a product of various acquisitive moves.

In July, Tokyo Sexwale`s investment company Mvelaphanda Holdings entered into agreements to buy out LTS`s minority shareholders. LTS bought back some of this shareholding from Mvelaphanda, leaving the latter with a 35% interest.

Further acquisitions have now been made in relation to minority shareholders in Total Computing Services. LTS acquired a 51% stake in this company in 2002.

In yesterday`s announcement, the group explained that the two minority shareholders in Total Computing Services had agreed to "sell" their interests in the company in return for a 23% shareholding in LTS. This deal still requires approval from Labat`s shareholders.

The group also noted that LTS would acquire the rights "in and to" management agreements with itself and Mvelaphanda. Mvelaphanda currently receives R110 000 monthly, or R1.3 million annually, off its management agreement with LTS. Labat receives R2.4 million annually off its direct management agreement.

Labat also has a management agreement with Tuscan Mood 242, which LTS procures by assignment from the former. The group says it will procure this agreement and settle it through the issue of 10.7 million shares to Tuscan, at 18c per share. This agreement will be sold on to LTS for a 3% shareholding in LTS.

A circular containing the full details of the acquisitions, and notification of a general meeting, is expected to be sent to Labat shareholders tomorrow.