EOH’s share price fell after announced yesterday that it received unanimous approval from its shareholders to raise up to R600 million through a rights issue that would help the technology group with its legacy debt issues.
By 3pm yesterday the share was down nearly 4% at R3.76.
Typically, shareholders don’t welcome rights issues as it dilutes their shareholding.
According to the IT group, it received the approval at the extraordinary general meeting held on Tuesday. EOH has been battling debt and has implemented a turnaround strategy to save the firm.
Board chairman Andrew Mthembu said: “The unanimous vote in favour of the rights issue demonstrates shareholders’ belief in the strategy as set by the EOH board and management team. The funds raised will be used to settle legacy debts and clear the way for the group to pursue its growth strategy.”
EOH CEO Stephen van Coller said, “We are grateful as a board and management team that shareholders have unanimously agreed to pursue the rights issue, and for the support they have shown for our strategy. We look forward to executing our growth strategy unencumbered by legacy issues and debts, after completion of the rights issue early next year.”
EOH also held its annual general meeting on December 13, 2022 and all resolutions were passed by shareholders.
In November, the group revealed its plans to go to its shareholders in a bid to settle its debt.
At the time, the group said the capital raising plan includes a renounceable rights offer of up to R500m or if the specific issue is not approved by EOH shareholders, up to R600m.
A specific issue of ordinary shares at the rights offer price for cash of R100m to black empowerment partner Lebashe Investment Group, means Lebashe is partially underpinning the rights offer subject to certain terms and conditions.
BUSINESS REPORT