Investors shy away from Net1 BEE initiative
Net1 UEPS Technologies, a provider of alternative payment systems, says that its Broad-Based Black Economic Empowerment (BBBEE) option has expired unexercised.
Net1 recently won a supreme court case against Absa subsidiary, AllPay Consolidated Investment Holdings to continue providing social grants in the form of smart cards in South Africa in a contract worth R10 billion.
AllPay had questioned the tender process.
However, Net1 is also currently being investigated by the US Department of Justice (DOJ) Criminal Division and the SEC, regarding possible acts of corruption in South Africa.
The firm had created a one-year option to purchase 8,955,000 shares with an exercise price of $8.96 per share granted to Business Venture Investments, a special purpose vehicle that represents a consortium of black South Africans, community groups and the Net1 Foundation. However, this option expired unexercised, the group said on Friday (19 April).
“The company and the BBBEE consortium are evaluating various alternatives to ensure the company´s empowerment objectives will be met,” it said.
“The protracted legal battle with Absa subsidiary AllPay regarding the Sassa (SA Social Security Agency) tender, recently decided in favor of Sassa and Net1 by a unanimous ruling of the full bench of the South African Supreme Court of Appeal, and the existence of the DOJ/SEC investigations have thwarted any chance that BVI may have had to raise the funds required to exercise the option.
“I am disappointed that our attempt to embrace South African economic empowerment policies has failed due to circumstances beyond our control,” said Dr. Serge Belamant, chairman and CEO of Net1.
Mr. Mosehla, who represented the BBBEE consortium, has expressed his continued commitment to Net1 and will remain a director on the Net1 Board.
“Net1 remains committed to these critical transformative policies and we hope to conclude a new transaction in the near future which will achieve a similar result. We would like to thank Mr. Mosehla for his contributions and continued commitment to the Company despite this unfortunate setback,” Belamant said.
Net1 has a primary listing on the Nasdaq and a secondary listing on the JSE.
More on Net1
Net1 wins supreme court case over Absa
Court grants leave to appeal in Sassa case
Net1 set for legal action against AllPay
Net1 shares slump 55% on corruption probe
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