Reunert purchase is set to help ATC

Posted On Wednesday, 18 September 2002 02:00 Published by
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Reunert is hoping its acquisition of embattled UK telecommunications company Marconi's controlling share in SA cable manufacturer ATC will set the company on a growth path again.
Reunert is hoping its acquisition of embattled UK telecommunications company Marconi's controlling share in SA cable manufacturer ATC will set the company on a growth path again.

This is because the deal would see ATC obtain a black empowerment partner in the near future, which was vital for the firm to secure lucrative parastatal contracts in SA.

Reunert said yesterday that the new shareholding arrangements represented an important step in facilitating the introduction of a black economic partner in the cabling company.

Communications manager Carina de Klerk said that with the controlling stake now being held by an SA company, as opposed to foreign companies, it would be easier to obtain a black empowerment partner.

Reunert said it would announce more details on the empowerment deal shortly.

ATC is said to be Africa's sole manufacturer of optical fibre and supplies communication cabling projects.

Reunert said yesterday ATC had been experiencing difficult trading conditions following the downturn in the telecoms industry worldwide.

However, the absence of a black empowerment partner in ATC had reduced the company's chances of securing contracts with its largest client Telkom.

As an SA parastatal, the country's telecoms monopoly now has strong black empowerment procurement policies in place.

In fact, ATC lost a Telkom contract worth R180m a year for the next three years for the supply of fibreoptic cables to two competitors with better credentials earlier this year.

This was despite the fact that the winning contractors had no domestic production facilities. ATC has subsequently appealed to the high court to review the decision by Telkom.

Telkom said yesterday the case was still pending, but that it stood by its decision.

Before the acquisition, SAlisted Reunert had a direct shareholding of about 28% in ATC, Marconi held 51% and African Cables held 21%.

Reunert and Italian firm Pirelli Cables & Systems each own 50% of African Cables.

In terms of the acquisition, Reunert acquired Marconi Plc's 51% share in ATC for an undisclosed price, subject to the fulfilment of a number of suspensive conditions.

Reunert will take immediate management control. On completion of the transaction, Reunert will own 79% of ATC (including its share through African Cables).

The 21% share held by African Cables in ATC will remain unchanged.

'We are confident that market conditions will improve in the longer term and that ATC will be a valuable asset going forward,' said Reunert CE Gerrit Pretorius.

Business Day

Publisher: Business Day
Source: Business Day

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