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MFL
MFL
Metrofile - Final restructure of Metrofile Holdings and cautionary announcement
Metrofile Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1983/012697/06)
Share code: MFL
ISIN Code: ZAE000061727
("Metrofile Holdings" or "the Company")
FINAL RESTRUCTURE OF METROFILE HOLDINGS AND CAUTIONARY ANNOUNCEMENT
The Board is pleased to advise shareholders that agreements have been concluded
for the refinancing of the debt of R320m in Metrofile (Pty) Limited
("Metrofile"). In addition proposals will be made to shareholders for a rights
issue of R135m to repay all of the external liabilities of R117m in Metrofile
Holdings and the costs of the restructuring, and provide cash for working
capital and any remaining contingent liabilities which may become payable.
REFINANCING OF METROFILE
Metrofile has R10m of mortgage debt and R310m of A, B and C loan debt repayable
by 4th March 2009 failing which a portion of the loan debt will convert to
shares in Metrofile and significantly reduce the 65% shareholding of Metrofile
Holdings in Metrofile. In order to remove the convertibility of the loan debt
and to extend the repayment period to match Metrofile"s cash flows, Metrofile
has raised R330m in new finance from Standard Bank of South Africa Limited
(SBSA), conditional on Metrofile meeting the conditions precedent set out in the
loan agreements by 31 July 2006.
METROFILE HOLDINGS RIGHTS OFFER AND PROPOSED PURCHASE OF MINORITIES IN METROFILE
Metrofile Holdings owes R85m to external creditors represented by interest-
bearing loan notes which are convertible into ordinary shares if they are not
repaid by 4 March 2009. These notes are also secured by inter-company loan
notes of R269m which may also be convertible to the benefit of the external
creditors, if the external loan notes are not paid by the due date. In addition
Metrofile Holdings has R32m of other creditors and has contingent liabilities of
which the Company estimates about R10m may need to be paid in due course.
The Board has accordingly resolved to propose a rights issue of R135m to
shareholders to settle the loan notes and creditors of R117m, pay the costs of
the restructure and retain cash for working capital and contingent liabilities.
It will be proposed to shareholders that the share capital of Metrofile Holdings
be increased to facilitate the rights issue, and the terms of the rights issue
are expected to be announced in September 2006 after the release of audited
results for the year ended 30 June 2006.
Metrofile Holdings will also propose that the 6.7m treasury shares be placed
under the control of the directors with a general authority to issue these for
cash only if required by the company to fund any contingent liabilities which
become payable and which are not covered by the cash raised in the rights issue.
At the same time the Board will propose to shareholders that Metrofile Holdings
acquires the 35% interest in Metrofile that it does not currently own thereby
constituting Metrofile as a wholly owned subsidiary of Metrofile Holdings.
These minorities comprise the group"s BBBEE partner, Mineworkers Investment
Company (Pty) Limited which owns 25% of Metrofile and management and directors
who own 10% of Metrofile. The Board believes it desirable that the interests of
these parties be better aligned with those of shareholders in Metrofile
Holdings, and in addition, owning 100% of the group"s operating assets will
facilitate future strategy. This was not previously feasible until the
refinancing of Metrofile was finalised and the liabilities and contingent
liabilities of Holdings reliably quantified.
DIVIDEND POLICY
Group cash flows will continue to be applied to the repayment of debt and no
dividends are expected to be declared during the six year refinancing period.
CAUTIONARY ANNOUNCEMENT
Shareholders are advised that Metrofile Holdings has entered into negotiations
to purchase the minority interests in Metrofile and which may have a material
effect on the price of the Company"s securities. Accordingly, shareholders are
advised to exercise caution when dealing in the Company"s securities until a
further announcement is made.
Cleveland
14th July 2006
Investment bank and sponsor
Standard Bank
Attorneys
Webber Wentzel Bowens
Date: 14/07/2006 03:29:08 PM Produced by the JSE SENS Department
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