EOH near to finalising plan to deal with debt noose

EOH Holdings CEO Stephen van Coller

EOH Holdings should be in a position to announce its capital-raising plans when it publishes it full-year results to 31 July 2022 in the coming months, the technology services group said on Friday.

The group, whose balance remains sheet highly geared, has engaged with shareholders in recent months regarding strategic options to deal with its debt problem, including the possibility of a rights issue.

“Despite the difficult operating environment, EOH continues to demonstrate resilience and affirm its profitability,” it said in a pre-closing statement ahead of its financial year-end. The final step now is to optimise the capital structure and we are confident that we can deliver in this regard

“The final step now is to optimise the capital structure and we are confident that we can deliver in this regard in order to pursue our growth strategy,” said CEO Stephen van Coller. “We remain on track to deliver the R60-million of cost savings highlighted in our first-half results presentation for the 2023 financial year.”

EOH said that with the “deleveraging strategy approaching completion, the group has been actively assessing its strategic options with regards to achieving an optimal long-term capital structure, which will allow EOH to pursue its growth strategy, immediately improve earnings and ultimately lead to value unlock for shareholders”.

“The board and management continue to assess the group’s capital-raising options and expect to announce its capital-raising plans alongside the release of its year-end results.”

EOH had cash balances of R540-million as of 27 July 2022, including foreign and restricted cash, but excluding an undrawn, R250-million overdraft facility. Margins

It has a refinanced R1.4-billion senior bridge facility repayable in April 2023, a R500-million, three-year senior-term loan due on 1 April 2025, the R250-million overdraft facility and a further R250-million in indirect facilities.

“Proceeds from the sale of Sybrin and the Information Services Group, have reduced the senior bridge facility to R832-million. The proceeds from the sale of Network Solutions and Hymax SA, a significant portion of which is expected to be received during the third quarter of the year, will further reduce the outstanding bridge facility by approximately R100-million.”

On its financial performance in the second half of the 2022 financial year, EOH said that with the exception of Nextec Infrastructure Solutions, its solid first-half performance continued into the second half. It also continued to deliver gross profit margins line with the first half. Group operating margins – measured using earnings before interest, tax, depreciation and amortisation – are also expected to be consistent with the first-half numbers.  – © 2022 NewsCentral Media Click here for more South African tech news