Datatec has more money than it has plans for. The Johannesburg-listed technology group behind Logicalis and Westcon has spent years selling and reshaping pieces of itself to win back value the market had written off, and the latest of those deals has just paid out. On Monday it told shareholders the proceeds are going straight back out again: R7.05 billion, or R29 a share.
Shareholders liked it. The stock rose almost 10% by mid-morning, valuing Datatec at just over R21 billion. At that price the payout is worth roughly a third of the entire company.
Where the money came from
The cash came out of Westcon, Datatec's distribution arm. In June it agreed to refinance the holding company sitting above the Westcon businesses and to sell a slice of it. The counterparties to those June agreements were two Atlantic Park funds, and the deal closed on 4 August.
General Atlantic put in a six-year loan of $375 million, and another $25 million in cash for 5% of that holding company, plus a share issue built to work like warrants. Chief executive Jens Montanana's point is that Datatec keeps control while gaining a lender and a shareholder in one move. Datatec's own share of the proceeds came to about $434 million.
Cash or shares
Now the choice. Take the R29 and, unless you are exempt, a fifth of it goes to the taxman, leaving 2 320 cents. Take new Datatec shares instead and no dividend tax applies at all.
The shares are priced off the average over the 30 trading days to 5 October, minus the dividend itself. Datatec is covering the transaction costs so the payout is not nibbled at on the way through.
What is left is a diary and one permission slip. The circular explaining both options goes out around 26 August. The last day to trade for it is 13 October, the register closes on 16 October, and the money and the new shares land on 19 October. The Reserve Bank still has the exchange control application, and Datatec will put the answer on SENS when it has one.
