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IFANET LIMITED
(Incorporated in the Republic of South Africa)
(Regitration Number 1965/006144/06; JSE Code;ISIN number:ݨ)
("IFAnet" or "the company")
PROPOSED RECAPITALISATION
1. Summary
LPC Manhattan Sponsors (Pty) Ltd is authorised to announce that agreement
has been reached for the refinancing of IFAnet by way of a specific issue of
shares to a number of parties and an interest free loan. IFAnet will remain
an independent financial services distribution network servicing in excess
of 350 brokers and seeks to expand this base substantially.
These issues will result in a total inflow of funds to the company of R7.5
million and a reduction in debt of R5.79 million. The funds will be used to
pay creditors, repay the bank overdraft and provide enough working capital
to enable the company to meet its budgets. A meaningful level of profits is
expected in the financial year to 30 April 2003.
In order to accommodate the refinancing, it will be necessary to reduce the
par value of the company's ordinary shares from 0.1 cent to 0.0001 cent per
share.
2. The proposals
In terms of the refinancing proposals, shareholders will be asked to approve
the following specific issues of shares for cash.
Arcay Holdings Limited ("Arcay") has agreed to lend IFAnet a sum of R2.5
million to be repaid over three years. The loan is interest free but it is
proposed to issue 84 000 000 new ordinary shares in the company to Arcay at
the new nominal value, being a total consideration of R84.00. Arcay will
also have the right to subscribe for a further 7 993 235 364 new ordinary
shares at the new nominal value, being a total consideration of R7993.24,
only in the event that the company defaults on a repayment. Minority
shareholders will be asked to waive their right to the mandatory offer which
would be triggered in the event that such issue takes place;
a group of investors led by Mr David Avnit has agreed to subscribe for 120
000 000 new ordinary shares at one cent each, to raise R1.2 million;
a second group of investors, which includes Dr Morris Bernstein has agreed
to subscribe for 180 000 000 new ordinary shares at one cent each, to raise
R1.8 million;
an individual investor has agreed to subscribe for 200 000 000 new ordinary
shares at 1 cent each, to raise R2.0 million.
investors, including certain employees and Mr F Andalaft, who is a related
party, who between them have lent R5.79 million to the company, have agreed
to capitalise their loans in return for the issue of 289 500 000 new
ordinary shares at 2 cents each.
3. Financial effects
The pro forma financial effects of the recapitalisation, if it had occurred
with effect from 1 May 2000, being the last year for which audited figures
are available, would have been as follows:
Actual Year Pro forma Change
to 30.4.01 Year to (%)
30.4.01
Loss per
share (c) (11.01) (0.99) -91.0
Net asset
value (c) (6.56) 0.38 +105.8
The financial effects calculations are based on the assumptions that the
converted loans did not bear interest for the period, that the saving in
interest paid was equal to 14% per annum and that the full number of shares
was in issue for the whole period.
4. New board of directors
It is proposed that Messrs David Avnit, Kevin de Villiers and Douglas
Kalkwarf and Dr Morris Bernstein be appointed to the board. Mr Avnit will
be appointed Chairman. Messrs RG Volks and SN Stewart have agreed to step
down from the board. Their contribution to the company's affairs is
gratefully acknowledged. Mr F Andalaft has agreed to remain in office and
will sign an employment contract as CEO.
5. Conditions precedent
The main conditions precedent are the approvals mentioned in paragraph 4
below and the completion of key-man insurance on, and an employment contract
with, Mr F Andalaft.
6. Documentation and approvals
The proposals outlined in this announcement are indivisible and subject to
the approval of shareholders (of whom 75% have irrevocably agreed to vote in
favour of the proposals), the JSE Securities Exchange South Africa and the
Securities Regulation Panel. A circular concerning the proposals is being
prepared and is due to be posted to shareholders within 30 days.
Johannesburg
16 November 2001
Sponsor and Transaction Originator
LPC Manhattan Sponsors
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