Didata's Choice goes own way at last
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By Lesley Stones
One of technology company Dimension Data's few black empowerment arms, 49%-held Choice Technologies, is seeking an investor with R18m to fund its goal of buying back its shares and becoming independent.
Choice managers and directors have been trying to negotiate an exit for about two years, but the predominantly white Didata has been reluctant to cut them loose for fear of losing what little empowerment credibility it has.
Now with Didata negotiating a new deal for fresh black partners to take a 25% stake in its business, it has apparently agreed to let Choice go. The empowerment deal Didata is crafting means it is no longer anxious to retain Choice at all costs. But to gain its freedom, Choice had to raise about R18m to buy the shares owned by Didata and to repay some loans, said Choice CEO Semela Tseka.
"Didata was never happy to let us go, but now it is willing to part with us, and said that if we pay them we can go," he said. "We are looking for a new investor to invest about R18m in us, then we can use that money to buy ourselves out."
Yesterday the Sunday Times reported that Nedbank had scrapped a R20m loan facility previously available to Choice because Didata had withdrawn its guarantees to cover any overdrafts. Didata had also suspended credit, and asked Choice to repay its loans, the paper reported.
"That all happened a year ago," Tseka said. "We have been running with no overdraft facilities for a year."
That the conflict has been officially confirmed may prove an embarrassment for Didata, which is promising big things for its forthcoming empowerment deal, yet has clearly not enjoyed a smooth working relationship with its current black partners.
Yesterday both companies played down the rift, issuing a joint statement saying Didata continued to work closely and support Choice Technologies. Dialogue was continuing, to ensure their mutual interests were satisfied.
Tseka said: "We value our partnership and working relationship with Dimension Data."
Choice directors have never clarified exactly why they are keen to pull out of the Didata stable, but their unhappiness has long been an open secret.
Tseka would not elaborate on the tension, but said: "We didn't agree to be part of the black economic empowerment thing that they are proposing."
That new empowerment deal has yet to be clarified, with a consortium of unnamed individuals and companies taking a 25% stake in Didata's South African operations for an undisclosed amount.
As well as holding 49% of Choice, Didata holds 49% in black-owned Plessey and 37% in black-owned M-IT. Didata's website says it has also lent those three companies a combined R4m to help grow their businesses.
Choice employs about 130 mainly black staff, has a turnover of about R200m and has won awards recognising it as one of SA's top black empowerment technology players. Last October it was named official technology supplier to support SA's bid to host the 2010 Fifa World Cup.
That contract has cost Choice about R5m to supply technologies and services to show that SA is capable of staging the international event.
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