Relyant Retail Limited
Registration number: 1937/010108/06
(Incorporated n the Republic of South Africa)
Share code: RLY ISIN number: ZAE 000016457
("Relyant" or "the Group")
RELYANT - TRADING AND GENERAL UPDATE
The Relyant Board is of the opinion that, pursuant to the interim results
announcement dated 28 March 2002 and prior to the release of the proposed
capital restructuring documentation, it is appropriate to issue a trading
and general update.
As indicated in the interim announcement the demand for consumer durables
remains subdued and as a result, unless trading conditions improve, the
Group will show a significant loss for the second six months. Accordingly,
the earnings for the year ending 30 June 2002 will be well below those of
the previous year before taking into account any restructuring provisions.
Factors influencing the Group's performance are:
* lower than expected sales due to lower demand in a heavily overtraded
market and a further tightening of the already strict credit criteria in the
lower end of the market;
* the high level of interest-bearing debt with rising interest rates. The
seasonal reduction in debt levels post the peak trading period has not
materialised to the extent expected; and
* the high level of gearing does not allow Relyant to take full advantage of
trading opportunities.
In addition, whilst the debtors book continues to be well controlled, the
board does not believe that securitisation can succeed in the current
environment and accordingly is no longer pursuing this initiative.
Shareholders are referred to the Relyant announcement dated 8 April 2002
("restructuring announcement") relating to the proposed capital restructure
of the Group. The board is adamant that this restructuring is essential for
the business to succeed in the prevailing, very tough environment. This
restructuring will fundamentally improve Relyant's cash flows, balance sheet
and future attributable earnings and specifically will reduce gearing to
below 40%, resulting in a significant reduction in interest costs.
Shareholders are advised that despite the worse than anticipated financial
position and trading performance of Relyant, POCO Holding GmbH, the
international investor, and the debt funders of Relyant remain committed to
the capital restructuring on the terms as set out in the restructuring
announcement. It is however critical that the restructuring process be
concluded as a matter of urgency. The Relyant board of directors therefore
recommends that shareholders approve the resolutions required to complete
the recapitalisation process. These resolutions will be detailed in the
relevant documentation that will be posted to shareholders in due course.
Shareholders are further advised that of the conditions precedent referred
to in the restructuring announcement the following have been met:
* agreement regarding the sale of the Relyant Micro loan book; and
* conclusion of syndicated loan agreements, which are however conditional
upon the remaining conditions precedent as detailed in the announcement of 8
April 2002.
3 May 2002
Johannesburg
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