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Corpcapital Limited - Progress report to shareholders and further cautionary
Corpcapital Limited
(Incorporated in the Republic of South Africa)
(Registration number 1983/011384/06)
(Share code: CPA ISIN: ZAE000034260)
("Corpcapital" or "the company")
Progress report to shareholders
IntroductionThis announcement serves to up-date shareholders on progress in the
implementation of the company"s realisation strategy entailing the disposal of
investments and distribution of capital to shareholders and related matters.
The implementation of the strategy is overseen by a board committee, which
comprises independent non-executive directors Doug Brooking as chairman and Tom
Wixley, non-executive director Martin Sacks and executive directors Neil Lazarus
and Benji Liebmann. Disposals and rationalisationsDetails of the company"s
disposals of its investments in Corpbuild and Vestacor were announced on 8 and
13 August respectively. Collectively, these disposals were at a premium of R143
million to the net asset value reflected in the company"s February 2003 accounts
("NAV"). This premium includes delivery to Corpcapital for placement or
distribution of 46 million Iliad shares at an assumed issue price of R3 per
share, but does not take account of the additional premium in the current
trading price of the Iliad shares.In addition to the disposals of these primary
investments, Corpcapital has sold its smaller investments in Chester, the
Connection Group, Dunlop Industrial Products ("DIP"), Infinex and Lyons
Financial Services. Of these, Infinex and DIP were realised at a discount and
the remainder were realised at a premium to their carrying value. Due to the
loss suffered on the realisation of Infinex" micro-lending book, the net loss to
NAV on account of these disposals is R8,7 million. Cash received by the company
on these disposals is R66,5 million, which includes the accelerated settlement
of R22 million in debt by DIP.Corpcapital has rationalised other activities and
overheads:
* The Cape Town business has been acquired by its management and now trades
independently.
* The Corporate Finance Division has been acquired by its management and
now trades independently.
* The Hedge Funds and Trading Division has been closed.
* The Financial Products Division has ceased taking on new business.
Historical business is being managed. An investment in a film library acquired
by Corpcapital Bank has been written off in an amount of approximately R20m.
* Corpcapital Life Insurance Company Limited has ceased undertaking new
business. Historical business is being managed.
* The Investment Banking team has been downsized and restructured to focus
on the realisation process.
* The complement of executive, finance and support staff has been
significantly reduced. In total the staff complement has been reduced from 101
to 49 and the number of executive directors from six to two.
* The property at 2 Arnold Road Rosebank has been placed on the market and
discussions with potential purchasers are underway.
Remaining investments and activities
The Corpcapital Property Division continues to conduct its business
successfully. Negotiations are at an advanced stage to dispose of a majority
interest in the division to its existing management and a strategic partner.
The successful conclusion of these negotiations will enable the company to
maximize the value of its remaining interest.
All options regarding the disposal of all remaining investments are under
consideration and negotiations are under way. At present it is not practicable
to state the timing of further disposals. In all cases, care is being taken to
ensure that efforts to expedite realisation do not compromise value.
The company"s interest in Cytech comprises its foreign investment in an internet
based gaming and administration business. This industry faces a decline in
internet activity worldwide and regulatory threats in the US. Cytech also faces
internal challenges and a weaker operational performance exacerbated by the
effect of the stronger rand on the value of the investment. In due course the
audit committee will consider and make recommendations to the board regarding
any write down which may be required for this investment over and above the
monthly amortisation of goodwill in accordance with the company"s accounting
policies.
Distributions
The Corpbuild and Vestacor disposals remain conditional, most significantly as
regards the approval of the competition authorities and of the company"s
shareholders. Both transactions are expected to become unconditional in
October.
The Corpbuild disposal requires that the company distributes to its shareholders
or places the 46 million Iliad shares to be issued to Corpcapital. The company
has received requests from certain shareholders to distribute the shares rather
than place them with third parties. An announcement regarding the board"s
decision in this regard and generally regarding distributions will be made after
the disposals referred to above become unconditional.
Further caution
In light of the above, shareholders are reminded to continue to exercise caution
in their dealings in Corpcapital shares.
Rosebank
29 August 2003
Sponsor to Corpcapital
Java Capital
Date: 29/08/2003 01:11:53 PM
Produced by the JSE SENS Department
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