EOH issues cautionary as stock slips further
EOH told investors on Tuesday to be cautious when trading its shares while it looks into its past dealings with the state. The stock has been battered over concerns about the company’s dealings with the government.
The share was trading 15.8% lower at R14.71 on Tuesday morning, the worst level in about eight years, following a report by TechCentral that Microsoft’s decision to cut ties with the company is linked to a tip-off about a contract with a government department.
The Johannesburg-based news website said the US IT giant’s move was related to an anonymous complaint to the US Securities and Exchange Commission (SEC) about a R120m software deal between EOH Mthombo and the department of defence.
EOH, which is headed by Stephen van Coller, has contracted ENSafrica to look into its bids for state projects over the past five years, including that deal. The company said shareholders will be provided with responses to media coverage “and advised of developments as appropriate, subject to legal advice”.
It advised investors to exercise caution when dealing in its securities for the time being.
A Microsoft spokesperson, who asked not to be named, told Business Day on Tuesday that “ending our partnership with EOH was a difficult decision that we did not take lightly. Although we do not comment on the specifics of our partner relationships, we felt it necessary to make the tough decision to end our partnership, even after weighing the possible impact.”
EOH’s shares have lost 52% of their value so far in 2019.
In January, the stock was dealt another blow when Eskom said its former chief procurement officer had been “involved in acts of misconduct involving EOH”. But the technology company said at the time it had already been cleared of any wrongdoing.