Cape Town - Information and communications technology company EOH is set to pay a total of R385m to unwind its acquisition of three former subsidiaries it bought in November 2015.
In an investor announcement on Wednesday, EOH [JSE:EOH] said it has finalised an agreement to sell back and unwind its acquisition of Grid Control Technologies, Forensic Data Analysts (FDA) and Investigative Software Solutions, known collectively as the GCT Group.
“The unwinding involves selling back the companies in the GCT Group to the former shareholders for an amount of R365m, which is equal to the cash originally paid and the value-adjusted EOH shares originally transferred,” it said.
“The unwinding is expected to result in a non-cash, once-off reduction in consolidated earnings of R385m for the financial year ending July 31 2018.”
EOH previously said it cut ties with the three groups on October 31 2017, after acquiring them in November 2015.
The three groups are tied to controversial businessman Keith Keating. Groups related to him have allegedly received over R5bn in SAPS contracts since 2010.
As News24 previously reported, it emerged during a meeting of the Standing Committee on Public Accounts on November 29 2017 that the State Information Technology Agency (SITA) had allegedly awarded two major contacts to companies linked to Keating without following due procurement processes.
Keating has denied the allegations.
He said the value of contracts between SAPS and the FDA amounted to R457m, not R5bn, and that his dealings with SITA have “always been above board”.
“If, for whatever reason, SITA has ever not complied with any procurement regulation, this can in no way be attributed to FDA," he said in a statement.
EOH, meanwhile, previously said it has appointed lawyers Edward Nathan Sonnenbergs to conduct a “full fact-finding review of the commercial activities” of the three companies.
It said the announcement is not expected to impact its headline earnings.