EOH Says Directors’ Margin Calls Caused Stock-Price Plunge

JOHANNESBURG (Capital Markets in Africa) – EOH Holdings Ltd. said forced stock sales due to margin calls involving two directors caused a 35 percent plunge in the stock on Dec. 7.

The decline was “triggered by the forced sale of shares by financial institutions against equity-financed transactions to various individual shareholders including two EOH directors,” the Johannesburg-based technology services company said in a statement on Monday.

Jehan Mackay, the chief executive officer of the public services unit, was forced to sell 127 million rand ($9.3 million) of shares from Dec. 5 to Dec. 8, while John King, the chief financial officer, had to sell 16 million rand of stock, EOH said in a separate statement.

The stock opened last week at 80.48 rand and almost halved to 47.52 rand by Dec. 8. It rose 3.3 percent to 49.07 at 9:03 a.m. in Johannesburg Monday.

EOH appointed law firm ENSafrica to conduct a fact-finding review of commercial activities of the three companies it bought in November 2015; it’s been in talks to unwind the purchases because of a “significant underachievement against performance warranties,” it said.

The companies are Grid Control Technologies (Pty) Ltd., Forensic Data Analysts (Pty) Ltd. and Investigative Software Solutions (Pty) Ltd.

EOH will “act against any identified wrongdoing or misconduct involving any individual or entity,” it said. ENSafrica will also examine EOH’s material public-sector engagements and contracts.

Source: Bloomberg Business News