PARADIGM CAPITAL HOLDINGS LIMITED
(Registration number 1997/012038/06)
("Paradigm" or "the company")
FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated 15 January 2001
and are advised as follows:
1. An application for the liquidation of the company, applications for the
liquidations of certain subsidiaries and other court actions against the
company and its subsidiaries have been launched or orchestrated by interests
representing former directors. The liquidation application against the company
will be heard on 28 February 2001, with the other actions to be heard in March.
In consultation and with the co-operation of the company's creditor banks
("the creditor banks"), these actions are being vigorously contested.
2. After discussions with the creditor banks, it has been decided not to sell
off the rental book. Discussions are in progress with the creditor banks to
reschedule loan and other exposures and restructure certain Paradigm
subsidiaries in order to alleviate the cash flow burden on the company. Final
agreements are expected to be reached in the near future. On conclusion of
these agreements, the terms and conditions of the capital restructuring with,
inter alia, Hannover Reinsurance Africa Limited will be finalised.
3. As part of the restructure set out in 2 above, certain unprofitable
activities have been curtailed or rationalised. During this process the
position of Aerial Empire ("AE") was evaluated. A decision was taken, in
conjunction with certain of the creditor banks, either to dispose of AE to its
major trade creditor or not to resist the trade creditor's application for the
liquidation of AE. This trade creditor has elected the latter course of action
and at this stage the financial impact thereof on Paradigm is expected to be
minimal.
4. Paradigm intends pursuing the recovery from the former Chairman and CEO of
the company, Mr R Mallach and Mr MT Forster respectively, of amounts owing to
the company. The aggregate of these amounts exceeds R90 million, as
established from a preliminary forensic report by the company's auditors,
Deloitte & Touche. Furthermore, charges of theft have been laid with the South
African Police Services against Mr Forster and a former employee. Other steps
against, inter alia, Mr Mallach, arising out of these investigations is
imminent.
5. In view of the above, as well as the company's continuing investigations,
shareholders are advised to continue to exercise caution when dealing in their
Paradigm shares until a comprehensive announcement is made.
Cape Town
23 February 2001
Sponsor
SASFIN BANK LIMITED
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