| Thu 18 Jun 2009, 14:45 | | GRF - Group Five Limited - Update: Group Five BEE relationship with iLima |
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GRF
GRF
GRF - Group Five Limited - Update: Group Five BEE relationship with iLima
Group Five Limited
(Incorporated in the Republic of South Africa)
(Registration number 1969/000032/06)
Share code: GRF
ISIN: ZAE000027405
("Group Five" or the "Company")
Update: Group Five BEE relationship with iLima
Update to shareholders
Shareholders are referred to the Group Five trading update dated 21 January
2009. In terms of such update, shareholders were informed that Group Five`s
management was actively working with its BEE and enterprise development
counterparties, "iLima" (as referenced below) to provide guidance in support of
their refinancing initiatives. In spite of significant efforts by iLima, Group
Five and other interested parties, exacerbated by the current adverse financial
market conditions, these refinancing initiatives have failed.
In addition, iLima has not fulfilled certain conditions and/or breached certain
terms to which the original Group Five BEE transaction was subject. As a
consequence, the Group Five BEE transaction, in so far as it relates to iLima,
will unwind. This will result in the return of the Group Five`s shares held by
iLima to Group Five.
Group Five`s direct and indirect exposure to iLima remains R172 million. From an
accounting perspective the exposure will ultimately be recouped against the
value of the shares held by iLima to be returned to Group Five and therefore
there will be no financial effect on the current and prior year earnings of
Group Five. There will also be no material effect on the basic weighted average
number of shares in issue. However, based on the reported results of December
2008 the fully diluted weighted average number of shares in issue would reduce
by approximately 5.2 million shares.
The unwinding of the iLima Group Five BEE transaction will not impact on Group
Five`s other BEE transactions involving Mvelaphanda Group Limited or the Group
Five BEE management and staff schemes.
As a result of Group Five`s focus on the continuous improvement of its BBBEE
scorecard and transformation, Group Five`s DTI and Construction BBBEE scorecard
overall rating remains unchanged.
Background to BEE relationship with iLima
In 2005, iLima Consortium (Proprietary) Limited ("iLima Consortium"), became
one of the participants in Group Five`s black economic empowerment equity
ownership transaction ("Group Five BEE transaction"). iLima Group (Proprietary)
Limited ("iLima Group") is a 62% shareholder of iLima Consortium.
In the same year, in a related transaction, Group Five entered into an
Enterprise Development Agreement ("EDA") with iLima Projects (Proprietary)
Limited ("iLima Projects"). iLima Projects is a construction subsidiary
of iLima Group.
iLima Projects, iLima Group and iLima Consortium are referred to collectively as
iLima.
In accordance with the EDA, Group Five periodically advanced technical and
administrative guidance and provided indirect financial assistance, in the form
of bond and guarantee support, and direct financial assistance, in the form of
working capital loans to iLima in relation to construction projects undertaken
by iLima. As previously reported the total value of direct and indirect
financial assistance provided to iLima by Group Five is R172 million.
Conclusion
Group Five remains committed to complying with both the provisions and the
spirit of BEE. Shareholders will be kept abreast of further developments
insofar as they relate to enhancing the Group Five`s BEE ownership shareholding.
Rivonia
18 June 2009
Sponsor to Group Five
Nedbank Capital
Date: 18/06/2009 14:45:01 Produced by the JSE SENS Department.
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