Brocker says Littauer deal off

Troubled IT services company Brocker Technology Group has canned its share-swap deal with Asian investment company Littauer Technologies only days after one of Littauer's directors was arrested.

Troubled IT services company Brocker Technology Group has canned its share-swap deal with Asian investment company Littauer Technologies only days after one of Littauer’s directors was arrested.

Brocker’s share price on the Nasdaq fell $US0.12c to $US0.25c after the announcement, the lowest it can go without jeopardising a four-to-one share consolidation designed to lift Brocker’s share price above $US1.

Brocker faces a forced delisting if it can not get its share price above $US1 by mid-May, and has a scheduled shareholder meeting on April 11 to approve such a share consolidation.

The company says in a statement that it has cancelled its agreement to buy 25% of the outstanding shares in Littauer, which trades on the Korean Stock Exchange and counts Ericsson as one of its investors. Brocker says its MOU was subject to a number of conditions, including completion of due diligence reviews, board and shareholder approval, “none of which have been satisfied to date”.

Brocker makes no mention of troubles within Littauer, but the Korean stock exchange's website is highlighting a story in The Korea Times, reported on March 25, which spells out a legal case.

The Korea Times reports that a former representative director of Littauer Technologies was arrested by the country’s prosecutors on charges of pooling funds from investors illegally through another company. The report also says the prosecution is investigating suspicions of stock price manipulation by Littauer.

Several arrest warrants have been issued to executives in a number of companies.

Littauer was formerly named Power-Tech and produced parts and supplies for ventilators and boilers before changing into an internet holding company.

It has been a stock market darling in Korea since last year, and has invested in a number of Korean companies.

The case is expected to rock the stock exchange and affect investors views of “acquisition and development” stocks, The Korean Times says.

Brocker's communication manager Nigel Murphy says Brocker was aware of the news reports coming out of Korea and statements made to Littauer shareholders by the company, but he adds that Brocker's board had already made the decision to put the deal on the back burner before the reports.

Murphy says due diligence proceedings had stalled and ground to a halt without Littauer giving any answers as to why, and Brocker felt it had to get on with other pressing issues instead.

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