So. African co. recovers after bribery-probe fall
Shares of South Africa's Net 1 up 24 percent, day after sinking on news of US bribery probe
NEW YORK (AP) -- Shares of Net 1 UEPS rebounded 24 percent Wednesday, a day after the South African company's shares lost more than half their value on the disclosure of probes by the U.S. government.
Net 1 UEPS Technologies Inc., a payment processing company, has operations in South Africa, South Korea, Ghana and Iraq. Its shares are listed on the Nasdaq and the Johannesburg Stock Exchange.
The U.S. Department of Justice and the Federal Bureau of Investigation are looking into whether Net 1 has violated the Foreign Corrupt Practices Act as well as other criminal and securities laws, the company said in a filing with the Securities and Exchange Commission Tuesday.
The probe aims to determine whether the company made "corrupt payments" to South African government officials to win a contract with the country's Social Security Agency, according to Net 1's filing. The contract reportedly made Net 1 the sole provider of social welfare payments for five years.
The SEC's enforcement division is also conducting an investigation, Net 1 UEPS said. It is cooperating with the probes, which it said were not findings of wrongdoing."
A statement from the company Wednesday said the investigation appeared to be linked to a dispute with AllPay Consolidated Investment Holdings, which also bid on the government contract awarded to Net 1 in January.
In August, a court ruled that the government's process for awarding the contract was "illegal and invalid" but stopped short of cancelling Net 1's contract, according to Net 1's statement. Both companies, along with the country's Social Security Agency, have appealed the ruling to the South African Supreme Court of Appeal.
Janney analyst Thomas McCrohan on Tuesday cut his estimate on the company's shares to $5 from $10, saying it's unlikely shares will rise above $5 until the issue is resolved.
Shares added 78 cents, or 24 percent, to $4 on Wednesday. They hit an all-time low of $3.01 in Tuesday trading, closing down 59 percent at $3.22. The stock had peaked at a 52-week high of $11.21 in February.
