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Accord Technologies Limited
(Incorporated in the Republic of South Africa)
(Reg No 1997/01969/06)
("Accord" or "the Company")
Investment by AIG African Infrastructure Fund L.L.C (the "Fund") in Pan African
Communication Network Limited ("PACONET")
INTRODUCTION
Further to the cautionary published on January 12, 2001, the Directors are
pleased to announce that PACONET, a company in which Accord has an equity
investment, has secured additional funding for the purposes of expanding a pan
African network using Internet Protocol ("IP") technology for the transmission
of data. PACONET is a company registered in Mauritius with offices in South
Africa and the United States.
FUNDING AND EQUITY STRUCTURE
The Fund is a Mauritius limited life company formed to invest primarily for
long-term capital appreciation through equity, quasi-equity and convertible
debt instruments in infrastructure-related companies and projects in African
countries His Excellency Nelson R. Mandela serves as the Chairman of the Fund's
Advisory Board. The American International Group ("AIG") which has a market
capitalisation in excess of US $200 billion is the Principal Sponsor and a
significant investor in the Fund. Other major investors in the Fund are the
International Finance Corporation ("IFC"), the African Development Bank
("ADB"), and Sheikh Mohammed Hussain Al-Amoudi.
According to the terms of the investment, the Fund will make up to $14m( R110m)
available to PACONET in return for 30% of the company's equity. The first
tranche of $4m( R31.5m ) has been transferred. Further capital calls will be
made in line with capital expenditure requirements. Accord holds 39.5% of the
equity, while management and strategic partners make up the remaining 30.5%. In
accordance with the shareholders agreement , Accord will make up to $1m (
R7.9m) available to PACONET. The first tranche of $288.000 ( R2.3m ) has been
transferred. Accord has secured funding for its investment.
PROSPECTS
Recent advances in IP Telephony technology, coupled with global
telecommunications deregulation have created an opportunity for emerging
multinational carriers to exploit cost advantages over existing monopoly
carriers in the $700 billion worldwide telecommunications market.
PACONET has acquired or is acquiring licenses in various African countries for
the provision of bandwidth and transmission of data. The company is at various
stages of deployment in Botswana, Angola, Swaziland, the Democratic Republic of
Congo and South Africa. PACONET will install its own infrastructure in
countries that will connect to its partners' facilities in the US and EU. The
company is not projected to be profitable in the current financial year ending
December 31, 2001. Shareholders are advised to take cognizance of :
* The PACONET valuation of up to US$46m( R361.4m) places a valuation of
Accord's shareholding at up to US$18.2m( R143m)
* The significant size of the investment by the Fund after extensive due
diligence on the company and its market;
* The potential value to global telecommunication corporations of a pan African
network.
MANAGEMENT
The company is managed by Ike Hasson (CEO)( Director of Accord Technologies
Limited ), Henry Hasson (COO)(Director of Accord Technologies Limited) and Tim
Whitfield (CFO) who were instrumental in raising the latest round of funding
for PACONET. These executives are employed exclusively by PACONET to
concentrate on the expansion of the African network. It is management's
intention to build enterprise value through ownership of licenses and
infrastructure while placing high importance on profitability.
CONCLUSION
In line with recent disposal activities, the company has a clear strategy
focused in the communication technology arena, primarily in IP telephony and
the development of technology enabling wireless access to the internet and
other mediums. This investment is a further step in cementing this strategy.
5 February 2001
Sponsor: BOE Securities
Legal Advisor to Accord: Fluxman Rabinowitz-Raphaely Weiner
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