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GRF - Group Five Limited - Update: Group Five BEE relationship with iLima

Release Date: 18/06/2009 14:45
Code(s): GRF
Wrap Text

GRF - Group Five Limited - Update: Group Five BEE relationship with iLima Group Five Limited (Incorporated in the Republic of South Africa) (Registration number 1969/000032/06) Share code: GRF ISIN: ZAE000027405 ("Group Five" or the "Company") Update: Group Five BEE relationship with iLima Update to shareholders Shareholders are referred to the Group Five trading update dated 21 January 2009. In terms of such update, shareholders were informed that Group Five`s management was actively working with its BEE and enterprise development counterparties, "iLima" (as referenced below) to provide guidance in support of their refinancing initiatives. In spite of significant efforts by iLima, Group Five and other interested parties, exacerbated by the current adverse financial market conditions, these refinancing initiatives have failed. In addition, iLima has not fulfilled certain conditions and/or breached certain terms to which the original Group Five BEE transaction was subject. As a consequence, the Group Five BEE transaction, in so far as it relates to iLima, will unwind. This will result in the return of the Group Five`s shares held by iLima to Group Five. Group Five`s direct and indirect exposure to iLima remains R172 million. From an accounting perspective the exposure will ultimately be recouped against the value of the shares held by iLima to be returned to Group Five and therefore there will be no financial effect on the current and prior year earnings of Group Five. There will also be no material effect on the basic weighted average number of shares in issue. However, based on the reported results of December 2008 the fully diluted weighted average number of shares in issue would reduce by approximately 5.2 million shares. The unwinding of the iLima Group Five BEE transaction will not impact on Group Five`s other BEE transactions involving Mvelaphanda Group Limited or the Group Five BEE management and staff schemes. As a result of Group Five`s focus on the continuous improvement of its BBBEE scorecard and transformation, Group Five`s DTI and Construction BBBEE scorecard overall rating remains unchanged. Background to BEE relationship with iLima In 2005, iLima Consortium (Proprietary) Limited ("iLima Consortium"), became one of the participants in Group Five`s black economic empowerment equity ownership transaction ("Group Five BEE transaction"). iLima Group (Proprietary) Limited ("iLima Group") is a 62% shareholder of iLima Consortium. In the same year, in a related transaction, Group Five entered into an Enterprise Development Agreement ("EDA") with iLima Projects (Proprietary) Limited ("iLima Projects"). iLima Projects is a construction subsidiary of iLima Group. iLima Projects, iLima Group and iLima Consortium are referred to collectively as iLima. In accordance with the EDA, Group Five periodically advanced technical and administrative guidance and provided indirect financial assistance, in the form of bond and guarantee support, and direct financial assistance, in the form of working capital loans to iLima in relation to construction projects undertaken by iLima. As previously reported the total value of direct and indirect financial assistance provided to iLima by Group Five is R172 million. Conclusion Group Five remains committed to complying with both the provisions and the spirit of BEE. Shareholders will be kept abreast of further developments insofar as they relate to enhancing the Group Five`s BEE ownership shareholding. Rivonia 18 June 2009 Sponsor to Group Five Nedbank Capital Date: 18/06/2009 14:45:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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