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Sekunjalo Investment Holdings And Futuregrowth Underwrite 82,6% Of R80m Rights Offer SEKUNJALO INVESTMENTS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1996/006093/06) Share Code: SKJ ISIN: ZAE000017893 ("Sekunjalo") RIGHTS OFFER SEKUNJALO INVESTMENT HOLDINGS AND FUTUREGROWTH UNDERWRITE 82,6% OF R80m RIGHTS OFFER 1. Introduction Shareholders were advised on 28 August 2003 that Sekunjalo intended to implement a rights offer, the terms of which have now been resolved by the board of directors of Sekunjalo. Accordingly, Nedbank Corporate is authorised to announce that Sekunjalo intends to raise R80 million before expenses by way of an 82,6% underwritten rights offer ("the rights offer") of 145 454 545 B ordinary shares (new B shares) with a par value of 0.002 cents each in the share capital of Sekunjalo ("B shares"). The rights offer is underwritten by Futuregrowth Asset Management (Pty) Limited ("Futuregrowth"), acting as agent for Momentum Group Limited, and Sekunjalo Investment Holdings (Proprietary) Limited ("SIH"), Sekunjalo"s controlling shareholder. 2. Terms of the rights offer The rights offer will result in the issue of 145 454 545 new B shares, which new B shares will be offered at an issue price of 55 cents per share in the ratio of 168 new B shares for every 100 B shares held on Wednesday, 24 December 2003. The rights offer will open at 09:00 on Monday, 29 December 2003 and will close at 12:00 on Friday, 23 January 2004. 3. Purpose of rights offer The purpose of the rights offer is to recapitalise the Sekunjalo group and to reposition it for organic and acquisitive growth. The significant loss suffered through the liquidation of LeisureNet had a material impact on the capital structure of Sekunjalo. This required the group to restructure and sell off a number of associate and subsidiary companies in order to meet its working capital requirements and settle external debt obligations. The rights offer provides Sekunjalo with the opportunity to strengthen its balance sheet within the group"s pharmaceutical interests and at the listed company level. 3.1 Pharmaceutical interests Sekunjalo has made a strategic decision to invest in pharmaceuticals and become a significant industry player. By implementing the rights offer, Sekunjalo will have the opportunity to benefit from the growth of its pharmaceutical interests. The first stage of this growth process is the intention to acquire generic dossiers from multi-national pharmaceutical companies. The debt burden in Sekpharma (Pty) Limited ("Sekpharma"), in which Sekunjalo currently holds an effective 19,4% economic interest, was severely impairing the working capital available for operations, thereby limiting its prospects for organic and acquisitive growth. Futuregrowth, the primary lender to Sekpharma, has agreed to an interest waiver and a partial capitalisation of the remaining debt. To achieve this, Futuregrowth agreed to partially underwrite the rights offer to the extent of its agreed debt balance of R21 million, since it believes the B shares are being issued at a substantial discount to the underlying fair value. Sekunjalo has also acquired the 40% of Sekpharma which was owned by Futuregrowth. 3.2 At listed company level SIH assumed the external debt owed by Sekunjalo and group companies amounting to R19.062 million, bringing the total amount owing by Sekunjalo to SIH to R45.473 million. SIH has agreed to underwrite the rights offer to the extent of its loan as it believes that Sekunjalo is trading at a large discount to its underlying value and has significant potential going forward. 4. Details of underwriting The rights offer is 82,6% underwritten by SIH up to a maximum of R45.473 million and by Futuregrowth up to a maximum of R21 million. An amount of R13.527 million is not underwritten. The impact of the underwriting agreements is highlighted in the examples below: - if none of the rights are followed, SIH will subscribe for R45.473 million worth of new B shares and Futuregrowth will subscribe for R21 million worth of new B shares. The balance of R13.527 million worth of new B shares will not be issued. In this scenario, a total of R66.473 million will be raised by Sekunjalo; and - if all of the rights are followed, neither SIH nor Futuregrowth will be called upon to fulfil their underwriting obligations. The entire R80 million will be raised by Sekunjalo from followers of the rights, being B shareholders or their renouncees. Upon successful implementation of the rights offer, Futuregrowth"s debt in Sekpharma will be extinguished and the full loan from SIH into Sekunjalo will either be repaid or converted to equity, depending on how many shares SIH is called upon to subscribe for in terms of its underwriting obligation. The rights offer will thus, depending on the level of take-up, raise R13.527 million in cash which will be retained by Sekunjalo for working capital purposes and to enhance organic growth. 5. Conditions attached to rights offer The rights offer is conditional upon: 5.1 the JSE Securities Exchange South Africa approving the necessary documentation and granting the required listing of the new shares and letters of allocation to be issued pursuant to the rights offer; 5.2 the Registrar of Companies registering the rights offer documents; and 5.3 conclusion of a signed underwriting agreement by the underwriters. 27 November 2003 Sponsor, Corporate Advisor and Investment Bank Nedbank Corporate Date: 27/11/2003 05:40:04 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
