There was a joint effort by AYO Technology Solutions (AYO) and senior British Telecom South Africa (BTSA) teams, comprising 10 to 12 people, in the preparatory work that culminated in the release of AYO’s pre-listing statement (PLS), the Western Cape High Court heard yesterday.
This was according to former AYO board member Abdul Malik Salie, who was a witness during the fourth day of a case where the Public Investment Corporation (PIC), the state-owned asset manager that invests mainly the Government Employee Pension Scheme (GEPF) funds, is attempting to recover about R4.3 billion it invested for a 29% stake in AYO, as part of a private placement prior to AYO listing on the JSE in December 2017.
The PIC has claimed AYO over-inflated forecasts and made over-inflated claims about its relationship with BTSA in the PLS, which led to the PIC making the investment, and that some of the information on BTSA should not have been made public in the PLS.
With AYO’s legal representative, Nazeer Cassim, questioning, Salie said the BTSA team was led by the firm’s managing director, Kevin Hardy. Hardy later became the CEO of AYO.
Salie said the growth forecasts in the pre-listing statement were based mainly on existing BTSA customer business in South Africa. He said he had been part of a team who hosted the owners of potential acquisitions to be made with the proceeds for the listing, in a two-day event that was held in the BTSA offices.
The identity of these potential acquisitions was provided by Hardy and one of his team, who had provided the identities of the companies that would potentially be acquired, said Salie. Salie said while they hunted for suitable acquisitions, it appeared as if the asking prices for the companies were higher after AYO’s listing.
Meanwhile, earlier yesterday, the court heard that in fact the PLS also contained a warning to potential investors that only historical information in the PLS could be regarded as factual.
This was said by AYO’s legal representative, Karrisha Pillay (SC), yesterday.
BTSA had been important to AYO’s listing as it ceded to AYO an initial BTSA contract with Sasol as part of an alliance agreement between them. The aim was for AYO to be a fully empowered partner of BTSA.
Pillay raised the forward-looking information warning statement, while she was cross-examining BTSA CEO Bertrandt Delport, who had reiterated to the court that the BT Group had expressed reservations about over-representation and over-inflated claims made in the PLS about AYO’s relationship with BT, and that the BT Group had not formally approved the transaction for the alliance and change of shareholdings required for the transaction.
Delport said he had read the forward-looking statement, but at the time, sometime after the listing, BT executives believed that most of the forward-looking statements in the PLS related to the BT Group and the group had taken legal counsel on the matter.
Under questioning from Pillay, Delport said he accepted that there was a strategic relationship between the two companies prior to the listing, with the well-meaning objective of getting AYO established and the pursuit of further opportunities in the ICT market.
He also concurred with Pillay’s reference to a statement in the PLS which said there was a “non-binding” agreement between AYO and BTSA.
Pillay also referenced a document that was used to pitch on the Sasol contract, which showed clear intention of BTSA’s alliance with AYO and to possibly gain more business.
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