ELLIES Holdings has decided to enter voluntary business rescue proceedings after efforts to turn the firm around have failed.
The share price yesterday ended the day 60% lower at R0.02.
The group has been trying to diversify from a purely satellite business towards a smart home infrastructure business, including solutions for alternative energy, water storage, connectivity, and the connected home.
In February 2023 the firm said a key part of its future strategy rested on a proposed acquisition of Magetz Electrical Proprietary and Power on Wheels Proprietary, collectively Bundu Power.
Ellies announced the plan to acquire Bundu Power on February 1, 2023, for R207.6 million, and it planned a R120m rights issue at the time. But in December it announced it would not require a rights issue and the terms of its acquisition of Bundu Power had been revised.
The acquisition was a key part of the strategy to expand into alternative power. It would strengthen the group's balance sheet and earnings, and provide a platform asset in the strategy pivot towards the smart home infrastructure business.
However, yesterday it said, “The proposed acquisition was subject to debt funding by the company's bankers and the approval of Ellies shareholders in general meeting by 31 January 2024.
“Our bankers have advised that they will not fund the proposed transaction and thus the company advises that the conditions precedent will not be met and therefore the agreement in this regard will lapse and be of no further force or effect.”
Meanwhile, it also said its interim results for the six months ended October 31, 2023, which were required to be released within three months of the period end, would be delayed.
“In light of the above disclosures, the board of directors of Ellies has resolved that it would be in the best interest of Ellies to commence with voluntary business rescue proceedings in terms of Section 129 of the Companies Act, No. 71 of 2008,“ it said.