Technology group EOH is righting its troubled house after it announced on Friday that not only had it reached a R178 million settlement deal with the Special Investigating Unit (SIU) and the Department of Water and Sanitation (DWS), but would proceed with a R600m rights offer.
The JSE-listed IT firm has to pay more than R178m, plus interest, for irregular dealings with the department between 2012 and 2017.
EOH will pay an initial upfront payment of R65m, which relates to duplicated software licences, and the remainder of an amount of R112m to be paid over a period of 36 months commencing in January 2023.
The new EOH board and management said it had, over the past four years since being appointed, taken investigation allegations of corruption and irregularities concerning it seriously.
EOH said upon learning, in February 2019, of certain transgressions of several previous employees and board members of EOH between 2015 and 2017, the new board and management of EOH instructed independent law firm ENSafrica to significantly extend the scope of the forensic investigation into the suspected wrongdoing covering a period from 2012 to 2018.
“From the inception of the ENSafrica forensics investigation, EOH has transparently and proactively reported wrongdoing to the authorities having submitted eight section 34 reports to the SIU between May 2019 and June 2020 and made detailed submissions to National Treasury and SITA as well as the Financial Intelligence Centre,” it said.
EOH Group CEO Stephen van Coller said: “The EOH Board and executive leadership express their gratitude to the SIU and DWS for their professional engagement and in working with EOH to reach a settlement agreement, and in so doing concluding on the legacy contract issues related to the ENSafrica forensic investigation and the DWS matter in particular.”
SIU spokesperson, Kaizer Kganyago, said the SIU settlement did not exonerate EOH from paying any further amounts due to DWS that might be subsequently uncovered by the ongoing investigation.
“Neither does the agreement waive the SIU’s rights to bring any action or application before the High Court or Special Tribunal to recover any further amounts of money that may be due to it or DWS which may be revealed by the ongoing investigation by the SIU or any other organ of the State.“
The deal did not exonerate any person from being held criminally liable for whatever criminal conduct that may be uncovered by the investigation.
Last year in was reported in the media that EOH was suing former directors, including former CEO Asher Bohbot and John King, the former chief financial officer, for billions of rand in damages for governance lapses when they led the company. King died last year.
Meanwhile, EOH also on Friday informed its shareholders of its plan to go to them for cash to resolve its legacy debt issues.
EOH has been battling debt and has implemented a turnaround strategy to save the firm.
In a statement, EOH said its positive financial results reflected a major milestone in the successful execution of its turnaround strategy and illustrate the significant progress made in addressing historical compliance, governance and risk failings.
With the turnaround of EOH’s compliance, governance and risk management was largely complete, and in the context of the significant improvement in EOH’s financial performance, the company’s board of directors said it considered it appropriate to focus on optimising EOH’s capital structure and positioning the company for future growth by proceeding with an equity capital raise of up to R600m.
“Notwithstanding significant progress to date, EOH’s deleveraging and liquidity objectives remain incomplete, with EOH continuing to be burdened by its debt commitments and interest obligations.
“This necessitated the renegotiation of its debt funding package with its lender group, which was concluded on April 1, 2022,” it said.
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