Labat to list subsidiary

By Nicola Mawson for Labat
Johannesburg, 31 Aug 2006

Labat Africa aims to list its Traffic Solutions subsidiary in order to achieve maximum value from buying out minorities.

The company told shareholders in a note to the JSE news service that it was also introducing a "strategic" 25% black economic-empowerment shareholding and was renewing its cautionary announcement.

Labat said it aimed to acquire minority interests and follow this up with a listing of Labat Traffic Solutions (LTS), in accordance with the board`s "intention to extract maximum shareholder value".

LTS has concluded agreements to acquire the minority interests in LTS and Traffic Computer Services, which is a subsidiary of LTS. After this process, Labat intends listing LTS on the JSE.

An IT and communications company, LTS generates and processes data and is focused on the government sector, especially at municipal level. It has reached an agreement with minority shareholders, the Suikerbos Trust and Pharoah, to acquire 49% of its shares, for R28 million in cash, which is effective today.

In addition, the company will buy out the 49% in Traffic Computer Services that its does not own from Jacobus Hermanus Taljaard and the Birkholtz Family Trust for R24 million in cash. This deal will also see an additional R6 million deferred payment over three years, subject to certain warranties.

The company has also entered into an agreement with Ice-Breakers 101 that will see it raise funding through shares and debt. It said the material effects of the transactions will be determined once terms of funding have been finalised.

This deal comes into effect as of 31 March 2006. However, both acquisitions require shareholder and regulatory approval.

Troubled waters

Labat Africa had its shares suspended from trading on 4 July 2005 as it failed to comply with the JSE`s listings requirements by not submitting its provisional annual financial statements on time. Its financial year ends in February. However, when the group released its provisional results on 31 August 2005, it stated the "suspension of the listing will be lifted from the commencement of trade on 1 September 2005".

At the time, it stated it was focusing its energies on core businesses, which included LTS. Labat Traffic had grown from a single contract for traffic fining services to having 12 major contracts and a national footprint. Total Computer Services, which provides back-office support, is also a successful subsidiary.

The company`s shares closed at 16c yesterday, the day of its announcement, which was unchanged from Tuesday`s close. Its 12-month high is 20c and its 12-month low is 2c.