AYO Technology Solutions (AYO) has informed its shareholders it would repurchase R619 million of the shares that the Government Employees Pension Fund (GEPF) holds in the company, as part of its settlement agreement with the Public Investment Corporation (PIC) and the GEPF.

In a statement, following a JSE notice issued by the ICT group earlier yesterday, AYO said it is revealing some of its settlement deal following an article in the Daily Maverick on March 25, which disclosed the settlement terms and which the group said misrepresented the agreement between it and the PIC.

“AYO wishes to emphasise and confirm that at no stage has it disclosed or verified the terms of the settlement to Daily Maverick or any other media publication.

“AYO must assume that the PIC acted in good faith, and it too would not have disclosed or verified the terms of the settlement to Daily Maverick. The only inference to be drawn from this is that the Daily Maverick obtained the confidential settlement it wrote about in a recent article in an unlawful and inappropriate manner,” the group said.

The group said the background of the deal had included the opportunity to list the technology-related entities under one umbrella as AYO, when its strategic partner, British Telecommunications South Africa (BTSA) posited the possibility of increasing market share through an alliance agreement with AYO.

“The PIC, seeing the scope of opportunity for a transformed ICT group that fulfilled the government’s B-BBEE codes, believed in the potential of the proposition. This was especially so due to the increasing uptake of digital across the African continent. This has subsequently exploded, and therefore AYO remains well-placed to take advantage of the growing market,” it said.

The settlement was made after the PIC had approached the Western Cape High Court looking to dissolve and recoup its R4.3 billion investment in AYO.

AYO said: “The company agreed to repurchase 17 202 756 ordinary shares in issue from the GEPF for a total repurchase consideration of R619 423 100. After the initial repurchase, the GEPF will retain a minimum stake of 25.01% in the company.”

According to the group, the GEPF has the option, after a period of three years from the date of the initial repurchase to sell up to a further 5% of the AYO shares that it holds at the higher of R20 per AYO share and the prevailing 90-day volume weighted average price of AYO shares traded on the JSE, subject to JSE regulatory approvals and the solvency and liquidity of the company.

“If the GEPF’s shareholding in AYO reduces below 25%, the GEPF will retain the minority protection rights it is entitled to exercise as of March 23, 2023,” the group said.

The group said the rights mentioned above would remain in place subject to the condition that the GEPF may not unreasonably withhold approval for a resolution by AYO shareholders authorising AYO to render financial assistance to the subsidiaries of AYO, and subject to regulatory approvals.

The GEPF shall for every 10% of the shares it holds in AYO be entitled to nominate one director to the board of directors of AYO, it said.

“The board shall continue to be chaired by an independent non-executive chairman and, for as long as the GEPF holds no less than 15% of the shares in AYO, the chairman of the board shall be appointed with the approval of the GEPF,” the group stated.

The group said AYO’s memorandum of incorporation shall be amended to give effect to the minority protections and the AYO board, which shall be filed with the Companies and Intellectual Property Commission by no later than three months from March 23, 2023.

The company said it wished to inform shareholders that the agreement was entered into between the parties in good faith and in the best interests of the company, and for the benefit of all its shareholders.

“Going forward, the company, the PIC, and the GEPF look forward to their joint endeavours in creating growth and value in the business of AYO,” it said.

AYO also said it welcomed the new management team appointed in the first quarter of 2023, as well as greater governance and the involvement of the PIC-appointed directors.

“Together, the company believes they can dispel the misinformation that has pervaded the market since late 2018,” the group said.