|
INTRODUCTION It has recently been announced that a meeting of debenture holders in Compass is to take place on 25 September 2001. On the agenda is a change to the memorandum and articles of the company and the debenture trust deed. Should these amendments be approved and subject to other conditions precedent, control of Compass will pass to Foord Asset Management (formerly Foord & Meintjes (Pty) Ltd)). This memorandum serves to advise debenture holders of Foord Asset Management's intentions and vision. BACKGROUND Compass has been the subject of contention between some of the debenture holders and management for a number of years. The small size of its property portfolio has rendered the existing business increasingly uneconomic to manage. A negative net asset value is attributable to the ordinary shareholders. It is now proposed that the property portfolio be sold to ApexHi in exchange for ApexHi units. Debenture holders will then be given the opportunity to accept a repurchase offer for their debentures by Compass, or to remain invested in Compass. DIRECTION Should Foord Asset Management succeed in acquiring control of Compass, it intends that Compass raise capital by issuing debentures for assets. Initially, these assets are likely to be property assets. Dave Foord (founder and CEO of Foord Asset Management) wishes to make a substantial personal investment in Compass. The assets in Compass are to be managed on a long term, total return (after tax income, plus net capital gains) basis. Foord Asset Management has a very successful record of achieving superior investment returns over a long period of time for its institutional and private clients. It is Dave Foord's belief that even better returns can be achieved in future. An important element in the formula is the ability to gear (borrow) at the right times. It is also important to be independent as principals can be wont to panic and withdraw funds at the very juncture of maximum opportunity. By concentrating on long term total returns Dave Foord believes it will be possible to take advantage of opportunities which occur when either greed or fear dominate the investment consensus. It will therefore be necessary to consider a contrarian approach from time to time, with Foord Asset Management intending to be pro-active in the management of both assets and liabilities. OBJECTIVE Foord Asset Management believe a suitable benchmark against which to measure its success would be an after tax total return of 10% per annum above the South African inflation rate on a rolling five year average basis. This objective is given as an indication in order for potential investors to gauge the suitability of the investment and in no way can be construed as an inducement or undertaking to deliver such returns over a given period. DISCLOSURE It is important for debenture holders to note that, assuming Foord Asset Management acquires control, the company will be taken in a new direction. This will change the risk profile of an investment in Compass debentures and may over time mean a change in the quantum of distributions. It is Foord Asset Management's intention to keep debenture holders informed semi- annually on a full disclosure basis about their investment. Debenture holders are currently entitled to 90% of Compass's pre-tax revenue profits and none of the capital growth. Should the scheme be approved, debenture holders will be due 90% of total returns; ordinary shareholders 10% of total returns. Debenture holders will therefore be in a significantly better position than before. The spread of ordinary shareholders is substantially below the minimum requirement of the JSE which has made it a condition of the scheme that the ordinary shares be delisted. Foord Asset Management would have preferred to maintain the JSE listing of the ordinary shares. CONCLUSION Those debenture holders who wish to stay for the new course to be set by Compass, should vote in favour of the scheme but not accept Compass's offer to buy back their debentures. Foord Asset Management looks forward to leading Compass into a new era, with existing debenture holders as partners. Dave Foord Foord Asset Management
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
