BLUE FINANCIAL SERVICES LIMITED - Update on recent developments

Update on recent developments

BLUE FINANCIAL SERVICES LIMITED
Incorporated in the Republic of South Africa
Registration Number: 1996/006595/06
JSE Code: BFS
ISIN: ZAE000083655
("Blue" or "the Company" or “the Group”)

UPDATE ON RECENT DEVELOPMENTS

1. BACKGROUND

  Shareholders are referred to the announcement published on
  the Securities Exchange News Service (“SENS”) of the JSE
  Limited (“JSE”) on 25 June 2013 (“June 2013 SENS”), whereby
  shareholders were advised of the Company’s continuing
  negotiations with Mayibuye on the proposed corporate action
  as well as the voluntary suspension of trading in Blue
  securities. By way of this announcement, Blue would like to
  update shareholders on the following key issues.

2. CONVERSION OF DEBT    IN    TERMS   OF   THE   DEBT   RESCHEDULING
   AGREEMENT (“DRA”)

  Shareholders are referred to the DRA concluded as part of
  the R163m recapitalisation of Blue by Mayibuye in December
  2010. In terms of the DRA, to the extent there is any
  shortfall at the end of the debt rescheduling period, being
  January 2014, between the DRA debt owing to the DRA funders
  and the DRA assets ring fenced to service the DRA debt, this
  shortfall would be automatically converted into Blue
  ordinary shares at the 30-day volume weighted average price
  at that time.

  Shareholders are accordingly advised that the DRA funders
  have notified the Company of their intention to bring
  forward the conversion date from January 2014 and the
  parties are in the process of finalising the effective date
  and calculations for purpose of this conversion.


  Benefits of accelerating the conversion will be an improved
  capitalisation of the Company’s balance sheet and a reduced
  interest and resultant cash flow burden on the Company.

3. PROPOSED CORPORATE ACTION

  Shareholders are reminded of the renewal of cautionary
  announcement published on the Securities Exchange News
  Service (“SENS”) of the JSE Limited (“JSE”) on 13 August
  2013 whereby shareholders were advised that the Company is
  continuing its negotiations with Mayibuye as well as key
  stakeholders in Mayibuye regarding the recapitalisation of
  Blue.

4. UPDATE ON INVESTIGATION COMMISSIONED IN 2010

  The forensic investigation commissioned by the Board in 2010
  has been completed. Horwath Forensics SA was appointed to
  undertake the investigation. In this regard, the Company has
  reported to the Directorate of Priority Crimes in terms of
  section 34 of the Prevention and Combating of Corrupt
  Activities Act.

  The Company will continue to offer its full support to all
  regulatory bodies in their investigation of this matter.

5. NEW INVESTIGATION COMMISSIONED IN 2013

  In the June 2013 SENS, the Company advised that the Board
  had commissioned a new forensic investigation in May 2013.
  In this regard, Horwath Forensics SA was appointed by the
  Board to undertake the investigation, which includes inter
  alia investigating transactions between the Company and
  Leonox Investments (Pty) Ltd.

  This investigation is ongoing, however, the Company has
  reported to the Directorate of Priority Crimes in terms of
  section 34 of the Prevention and Combating of Corrupt
  Activities Act.

  The Company will continue to offer its full support to all
  regulatory bodies in their investigation of this matter.


6. FEBRUARY 2013 FINANCIAL RESULTS

  The February 2013 financial results are anticipated to be
  published as soon as the auditors have completed their
  audit. The Board is fully aware of the importance of
  concluding the audit and would therefore like to give
  shareholders the comfort that the matter is being given the
  highest priority.

7. TRADING OF SECURITIES

  The Board will apply to the JSE to recommence trading of
  Blue securities on the stock exchange once the February 2013
  financial results have been published. Until such time the
  voluntary suspension of trading of Blue’s securities will
  remain in effect.

Johannesburg
26 August 2013


Designated Advisor
Grindrod Bank Limited

Date: 26/08/2013 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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