EOH’s future – MyBroadband

After losing its entire top management twice, and much of its board, EOH has a leadership team in place who can rebuild the once-great South African technology company.

To understand what EOH’s future might look like, it is necessary to go back six years — when Stephen van Coller became CEO on 1 September 2018.

EOH’s share price was on a downward trend, trading at R40 per share, well below its highs of over R100 two years earlier.

Van Coller’s mandate was to create value by growing EOH and generating jobs. Shareholders were tired of losing money.

However, a group of former directors and executives said banks had parachuted in Van Coller, a former banker, to ensure they got back the money EOH owed them.

The company was under pressure because of its growing debt burden, reports of corruption and mismanagement, and poor corporate governance.

Van Coller tackled corruption and poor corporate governance and focused on reducing debt.

However, to pay back EOH’s loans, he sold many of the company’s best-performing business units, including Sybrin, Construction Computer Software, and LSD Information Technology.

The company’s former management team was criticised for selling its most valuable subsidiaries at a fraction of their market value, destroying its revenue-generating capabilities.

The company’s financials have supported these accusations, as its assets have declined much faster than its liabilities.

The decline in equity is due to losses from selling the assets at lower than book value prices.

EOH also raised another R600 million from investors in February 2023 through a R500 million rights issue and a R100 million BBBEE deal.

The proceeds of the capital raise were used to settle the majority of EOH’s senior bridge facility.

Van Coller said he was very proud that EOH never missed an interest payment and that the banks got all their money.

He added that the successful rights issue welcomes a new era for EOH, knowing that their strategy for EOH 2.0 has the backing of all their shareholders and lenders.

Shareholders, who had seen over 90% of their wealth disappear since Van Coller took over, were ready to see the growth he had promised.

However, EOH 2.0 failed to meet expectations, and shareholders experienced significant wealth destruction.

Management exodus

When the rights offer was announced, EOH traded at R4.28 per share. Shareholders were offered 227 additional shares for every 100 held for R1.30 per share.

This made the theoretical breakeven price for the share after the rights offer was completed R2.20.

In February 2024, a year after the rights offer, the EOH share price declined to R1.05 per share.

EOH’s loss for the six months through January 2024 widened by over 1,600%. The company’s loss per share deepened from 3 cents to 15 cents.

At the same time, Van Coller and EOH CFO Megan Pydigadu had tendered their resignations.

Pydigadu’s last day was 31 October 2023, and Van Coller’s 31 March 2024.

However, it quickly emerged that they had no succession plan in place, and their departure left a leadership vacuum.

EOH appointed chairman Andrew Mthembu as interim CEO.

However, this did not work out as expected, and EOH’s shareholders grew impatient. They wanted to start seeing the promised returns.

On 10 May 2024, EOH announced that it “had been approached by certain shareholders regarding the succession plan for the EOH board”.

It said it was engaging further with the shareholders and would make an announcement soon.

New board, new management

That announcement came on 31 May 2024, when EOH revealed sweeping changes to the board.

It replaced Mthembu as interim chief executive and chairman and announced that Jabu Moleketi was the new chairman.

The EOH board appointed Marius de la Rey, the current chief executive officer of the company’s largest segment, iOCO South Africa, as interim CEO.

It also appointed Marialet Greeff as CFO, but she resigned after four months on the job.

Greeff was the last remnant of EOH’s top executives, meaning her departure signals the second complete change to the exco team.

On 19 July, a month after Greef’s departure, EOH announced the appointment of Ashona Kooblall as executive director and group chief financial officer.

Kooblall is also from iOCO. She joined EOH in 2020 as the finance director of iOCO SA and became the chief financial officer of iOCO in January 2024.

EOH now has a new board and executive management in place who will hopefully be able to turn the company around.

MyBroadband contacted EOH for comment on what the market can expect from the company, but it did not respond by publication.