AYO has agreements in place to continue trading despite banking service freeze
CAPE TOWN - AYO TECHNOLOGY Solutions has reached agreements with professional third parties, financial services institutions and trusts that will enable it to do business over the next few months, its board said on Friday.
These arrangements form part of a seven-point plan to ensure the sustainability of the business over the next few months after the Gauteng High Court last week denied urgent relief against First National Bank’s plan to suspend banking services to AYO from today.
It emerged from court proceedings that AYO had not yet fully exhausted its options with other banks, notwithstanding AYO’s testimony that it awaited feedback from some banking institutions, and that not all banks in the country offered the suite of services that AYO required.
Court evidence also suggested AYO could use third party accounts such as trust accounts and other third party payment mechanisms to pay suppliers and employees as an interim measure.
A further suggestion was that AYO advanced bridging loans to employees, and that it continued to engage with local and international banks to open transactional banking facilities.
“The company has received positive feedback from some banking institutions indicating their willingness to engage with AYO. AYO will be finalising these engagements over the next few weeks,” a statement from the board of South Africa’s biggest black owned ICT group said on Friday.
AYO would be restructured into a core investment company and would reduce its operational footprint at corporate and subsidiary level to enhance value to shareholders.
“Regrettably, this may result in job losses. However, this drastic step is necessary to ensure sustainability of the business,” the board said.
AYO’s relationship with its subsidiaries would also be restructured so that AYO became an investor rather than an operating entity. This would also create an opportunity for management of these subsidiaries to become shareholders, as well as other groupings, including women and trade unions.
The court had also raised concerns about AYO’s role in the Mpati Commission that probed the PIC, and about a R6.5 million fine that the JSE had imposed on AYO.
“AYO has strengthened its processes, governance, and teams to ensure that in future, no administration errors occur,” the board said.
It said AYO was working with legal advisors, including plans to commission an independent expert likely to be a retired judge or senior advocate with no previous links to AYO, to review the findings of the Mpati Commission, as relevant to the company.
A mediation process with the PIC would be intensified to reach an amicable solution and develop a positive investor-investee relationship with the PIC. AYO also intended to continue to engage with stakeholders including regulators, to keep them abreast of the company’s strategies and efforts to ensure sustainability.
“The board is perturbed by FNB’s reliance on the Mpati Commission report as well as the JSE fine issued to AYO in 2020, as a basis to close the company’s bank account. AYO again asserts that the Mpati Commission was not a court of law,” the company said.
With regard to the JSE fine, AYO said it related to preliminary (unaudited) results that were non-compliant with certain IFRS requirements.
“While AYO believes the sanction was disproportionate in severity to the seriousness of the reporting errors found, the accounting errors were not fraudulent, but rather differences in interpretation of IFRS standards,” the group said.
The board said it believed it might be faced with a targeted campaign aimed at destabilising the company. This, despite AYO having co-operated fully with all regulators, including the JSE, CIPC, the Mpati Commission and others.