MGX Holdings Limited - Recovery plan calls for res
MGX Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1983/012697/06)
Share code: MGX
ISIN: ZAE000009262
RECOVERY PLAN CALLS FOR RESTRUCTURED MGX
Johannesburg, 29 January 2003
The MGX board is planning to restructure the group on a smaller base in the
first stage of a recovery strategy announced today.
Executive chairman and interim CEO Peter Flack, who was appointed two months ago
to head a strategic review of the group, said negotiations were already under
way to sell some of the MGX businesses to ease its debt load, currently standing
at some R550 million. The disposal process was not being conducted on a fire-
sale basis and these businesses would only be sold for a fair consideration. He
cautioned, however, that even if these sales were concluded at favourable prices
by the June target date, the remaining debt might still be too heavy for the
restructured group to bear. By mid-year, the board might therefore have to
consider a rights offer, the disposal of further businesses or the sale of all
the group`s remaining assets.
Noting that the group`s immediate funding problems had been eased by a R100
million loan from a consortium of banks, Flack said a thorough analysis of MGX`s
businesses had confirmed that they were all in reasonably good shape. The
group`s problems had originated at its centre, where it had suffered from some
serious reputational setbacks as well as a general lack of leadership, direction
and control.
Flack said over the past two months the previously rudimentary accounting set-up
at the centre had been strengthened and financial reporting systems throughout
the group had been standardised and were being monitored strictly. Monthly
board meetings had been instituted at the corporate as well as the operational
level and a newly established executive committee was meeting on a weekly basis.
On the reputational front, MGX has approached the SRP regarding a process for
resolving the EC-Hold dispute. The forensic audit into the CCH acquisition has
been completed and the board has been advised that it was pointless to pursue
this matter further.
Settling the EC-Hold matter satisfactorily was a priority, Flack said. Other
issues on which the MGX team are focusing at present include the sale of certain
businesses; strategic planning for the remaining operations; and the
introduction of value-adding black empowerment partners at subsidiary level.
Strategic and action plans as well as budgets for a reconstituted MGX are due to
be submitted to the board in June. The group`s results for the six months to
December 2002 are scheduled for publication during the last week of March.
Issued by du Plessis Associates on behalf of MGX Holdings Limited.
dPA contact Kathy du Plessis on -
Tel: 011-728 4701,
mobile: 083 266 5847 or e-mail gen@dpapr.com
For further information call
Peter Flack on 082-800-4291
Date: 29/01/2003 10:01:00 AM Produced by the JSE SENS Department
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