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INTERVID LIMITED - ANNOUNCEMENT
Intervid Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/011483/06)
Share Code : ITV
ISIN: ZAE000025615
("Intervid")
INTERVID LIMITED ("INTERVID"):
RECOMMENDATION REGARDING THE PROPOSED REMOVAL OF THE INDEPENDENT NON-EXECUTIVE
CHAIRMAN AND PROPOSED APPOINTMENT OF THREE NEW DIRECTORS
As announced on SENS on 30 January 2004, three of Intervid"s shareholders, the
Howard Family Trust, the James Howard Family Trust and the Kate Howard Family
Trust ("the Howard Family") have requisitioned a shareholders meeting to be held
on 23 February 2004 as set out in the circular posted to shareholders on 30
January 2004. The purpose of the meeting is for the Howard Family to propose
the removal of the independent non-executive director and chairman, Mr Bill
Lambert, and appoint three new non-executive directors, Mrs Connie Howard,
Messrs Richard Evans and George O"Reilly.
The Board of Intervid ("the Board") currently has two divergent views on the
matter. The Board had intended to furnish shareholders with both of these views
being the minority view of Messrs Robin Howard (non-executive director) and
James Howard (executive director), and the majority view of Messrs Johann
Pieterse (non-executive director), Wayne Jaggard (executive director and CFO)
and Mark Taylor (executive director and CEO). The Chairman has abstained
because his appointment is in question.
Minority View
The minority of the Board have declined to make a recommendation at this time.
Majority View
The majority of the Board recommends that shareholders vote against the proposed
resolutions. They are of the opinion that the proposed resolutions are not in
the best interests of the company for the following reasons:
- The Board of Intervid has supported the governance principle that a team of
experienced, capable and independent non-executive directors should be in place.
To this end the Board established a Nomination Committee during 2003 to review
both the existing directors and possible new appointments. This procedure has
not been completed and any board changes would therefore be premature and would
not have been thoroughly evaluated.
- Intervid is undergoing a turnaround process and a major disruption to the
board may negatively affect confidence in the company. Management also believes
that an uninterrupted focus on improving the business is important at this stage
of Intervid"s turnaround. The differences of opinion amongst shareholders and
amongst the Board are distracting management from the responsibility it has of
delivering shareholder returns. This is of especial concern in view of the
progress which has been made by the new management to date.
- A disruption to the Board may affect various negotiations with financiers,
including Intervid"s bankers. The ongoing public support of Intervid by VenFin
Limited ("VenFin") is important in giving Intervid"s stakeholders confidence.
RFS Holdings Limited ("RFS"), an associate of VenFin, is the primary loan
creditor of Intervid International AG. RFS has continued to support Intervid by
allowing necessary funding to flow into Intervid"s South African-based
activities. VenFin has advised that it is opposed to changes to the Board of
Intervid, including the removal of the independent non-executive chairman, Mr
Bill Lambert. The support from VenFin and RFS is important for the future of
Intervid until the turnaround process fully translates into sustainable
financial delivery.
- RFS effectively holds the right to convert its loan of US$ 50 million into
Intervid shares from June 2005. At the time of conversion after June 2005
Intervid would be obliged to issue new shares to RFS which could potentially
lead to a significant dilution of existing shareholders. The current board of
Intervid is at an advanced stage of negotiations with RFS to limit its
conversion shareholding to a maximum of 65% of Intervid, thereby minimising the
potential dilution of minority shareholders. These negotiations may be
jeopardised and this will not be in the best interests of shareholders.
The Board has been in negotiations with VenFin to underwrite a conditional
rights issue which was announced on SENS on 9 January 2004. These negotiations
may also be jeopardised.
- The Board has endeavoured to find an alternative underwriter without
success. The majority of directors are not aware of any other prospective
financing arrangements in the event that VenFin, RFS or Intervid"s bankers react
unfavourably to the proposed changes to the Board.
- The Chairman was appointed at the AGM on 4 November 2003 after being
proposed and voted for by the Howard Family. The Chairman has indicated that he
is of the opinion that he has an enforceable agreement with the Howard Family
for his appointment for a full term of office.
Shareholders are accordingly requested to apply their minds carefully to the
above recommendations before exercising their votes.
Durban
4 February 2004
Sponsor
Rand Merchant Bank, a division of FirstRand Bank Limited, Corporate Finance
Date: 04/02/2004 09:04:08 AM Produced by the JSE SENS Department
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