Board shake-up revives EOH's share price
Two of the company's founders have resigned.
Shares of South African technology services group EOH on the JSE rose as much as 17 percent on Thursday, the day after the company announced that two of its founders resigned in a board shake-up.
EOH’s shares have plunged for a sustained period as the company faces serious corruption allegations that might prompt an investigation by the US Securities and Exchange Commission.
EOH’s shares have fallen by 45 percent so far this year and 73 percent over a 12-month period.
On Wednesday, EOH announced that the chairman Asher Bohbot (pictured), the firm’s CEO for 19 years, will step down at the end of this month and remain on as an adviser until July 31.
EOH said in accordance with King IV, a former CEO should not serve as chairman of the board until a three-year cooling off period has been observed. This was the reasons for Asher’s departure.
“I have confidence in EOH’s management and believe that the new strategy, which is in advanced stages of implementation, will be beneficial to all our stakeholders,” said Asher in a statement.
Other departures from EOH include Rob Sporen, also a founding member of EOH, Tshilidzi Marwala, a non-executive director who has served on the board for 11 years, and Tebogo Maenetja, the human resources executive director, who will leave at the end of April.
The plunge in EOH’s share price was exacerbated by Microsoft’s decision to serve notice on EOH Mthombo, an EOH subsidiary, to terminate the company’s Licensing Solution Provider agreement and its Microsoft Partner Network agreement.
The termination of the agreements means that EOH will no longer have direct access to Microsoft products and services, but it could partner with a Microsoft reseller.
EOH said the termination of the agreements will have a profit impact of approximately R10 million in its current financial year.
According to Johannesburg-based website TechCentral, Microsoft terminated its partner agreements with EOH after an anonymous whistle-blower filed a complaint about alleged malfeasance involving a South African department of defence software procurement deal with the US Securities & Exchange Commission (SEC).
TechCentral has seen correspondence that indicates that the whistle-blower lodged the complaint with the SEC at the end of November 2018 under the US’s tough anti-graft legislation, the Foreign Corrupt Practices Act.
EOH CEO Stephen van Coller has ambitions to restructure the firm in different parts that consists of more than 270 companies, and calm investors jitters. Stephen, a former executive at Absa and MTN, was brought in at EOH in 2018 to turn the troubled business around.