Bruce Whitfield
Transport consulting firm Terrafin is probably going to have to negotiate its way out of an acquisition it made in 1999 if it’s to have any hope of restoring investor confidence. The company has come under renewed pressure this year following negative media reports about its empowerment strategy and its scheme to enable truck drivers to run their own businesses and subcontract their services to the firm.
It bought a company called Sabot Management in January 1999 for R160-million in cash and shares. Payment of a minimum of R60-million was to happen over three years, and the balance was subject to a range of profit warranties. But Sabot has had problems collecting payments. Terrafin financial director Graeme Inggs says that has meant Sabot has not been able to deliver on its promises.
“I can’t really talk about that though,” said Inggs. “We’re trading under cautionary at the moment, and it wouldn’t be right to discuss it in detail.”
It is understood that Sabot Management is having a tough time collecting the money owed to it. The share price took no notice of Terrafin’s stronger than expected interim results last year, which saw earnings a share gain 73% on the corresponding period the year before. The concerns about its growing debtors and negative cash position have hampered the company.
The cautionary was announced on December 15, and Inggs says intense negotiations with an unnamed party have been under way since then.
The company has also been under pressure this year following media reports that it was unfairly prejudicing the owner-drivers who are subcontracted to it. The company was accused of impounding vehicles and of preventing the drivers from operating businesses.
“We signed surety on four vehicles,” says Inggs, “we are responsible to the banks for the payments on those vehicles and if the drivers are prepared to release us from those sureties, then they can have the trucks back.”
KwaZulu-Natal’s Department of Transport is investigating the drivers’ allegations, and is probing the Camperdown vehicle licensing station to see whether there have been any irregular transactions involving Terrafin.