| Wed 19 Mar 2008, 16:51 | | PPE - Purple Capital - Renewal Of Existing Cautionary Announcement And |
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PPE
PPE
PPE - Purple Capital - Renewal Of Existing Cautionary Announcement And
Global Trader Europe Update
Purple Capital Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/013637/06)
Share code: PPE & ISIN: ZAE000071411
("Purple Capital" or "the Company")
RENEWAL OF EXISTING CAUTIONARY ANNOUNCEMENT AND GLOBAL TRADER EUROPE UPDATE
In an earlier cautionary announcement dated 15 February 2008 shareholders were
informed that Global Trader Europe ("GTE"), the owner of the European and Asian
operations of the Global Trader Group, had applied to be managed under
Administration as a result of a regulatory capital deficit. GTE was placed into
Administration on 15 February 2008 following an application to the court by the
Directors of GTE.
Shareholders are advised that the Administrators:
- have been able to confirm what moneys were actually contained in the
segregated accounts, and that those moneys agree to GTE`s records of the sums
which were due to each client who was treated as segregated;
- are finalising the amounts recoverable from prime brokers due to non-
segregated clients;
- are completing their assessment of the likely recovery of substantial
amounts due to GTE (certain of which amounts are secured by collateral);
- are in discussion with parties interested in purchasing part of the
business of GTE.
GTE is an independently held subsidiary of New World Trader Limited (Ireland)
("NWT") whereas the South African operations are owned directly by Purple
Capital and held in First World Trader (Pty) Limited ("FWT"). This direct
ownership of the South African operations was established in compliance with a
condition of the approval of the original acquisition by the Exchange Control
Department of the South African Reserve Bank. The South African operations
remain unaffected economically or legally by the circumstances of GTE.
FWT is considering the outright purchase of Global Trader Canada ("GTC") from
NWT to pursue international product and growth opportunities. GTC is an agency
only retail business which provides FWT with the ideal vehicle through which to
promote and sell its products.
Purple Capital`s accounting loss, should GTE be wound up rather than sold, will
be limited to the proportion of the total purchase price attributed to GTE
which, based on the estimated proportionate earnings will be approximately 20%
of the purchase price, or approximately R63 million.
At the time of the acquisition of Global Trader by Purple Capital, an amount of
Euro4.5 million of the purchase price was retained in escrow in the event of any
claims. In anticipation of the abovementioned loss, Purple Capital has initiated
claims against the vendors for an amount substantially in excess of, but
including the balance in the escrow account. Furthermore, Purple Capital could
benefit from any recovery of the substantial debtors in GTE to the extent that
such recoveries exceed the amount needed to settle clients and other creditors
in full. However, this process may be lengthy and the outcome is uncertain.
FWT continues to perform well, supported strongly by its experienced management
team, loyal client base and volatile equity markets coupled with the extended
commodity bull run.
Shareholders are advised to continue to exercise caution when dealing in the
Company`s shares until final details of GTE`s restructuring are certain, at
which time a detailed announcement will be made.
Johannesburg
19 March 2008
Sponsor: Bridge Capital Advisors (Pty) Limited
Date: 19/03/2008 16:51:33 Produced by the JSE SENS Department.
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