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Changes to the board of directors and exit of investment in the Last Mile Fund
EXTRACT GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/011672/06)
JSE share code: EXG ISIN: ZAE000246013
(“eXtract” or “the Company”)
CHANGES TO THE BOARD OF DIRECTORS AND EXIT OF INVESTMENT IN THE LAST MILE FUND
Shareholders are referred to the withdrawal of cautionary announcement released on SENS on 13 February 2018
wherein shareholders were advised that a significant number of eXtract’s shareholders have indicated a preference for
any surplus cash to be returned to shareholders and that a special board meeting would be held to consider the Company’s
strategic direction.
The board of directors of eXtract (the “eXtract board”) has resolved to follow a strategy whereby surplus cash will,
absent any investment opportunity which comes to their attention, be returned to shareholders. To align the Company’s
board with the new strategy, 5 of the current eXtract directors will step down on 23 February 2018 and eXtract will exit
its investment in the Last Mile Fund Proprietary Limited (the “Last Mile Fund”).
Reconstitution of the eXtract board
Pursuant to eXtract’s strategy to return surplus cash to shareholders the eXtract board will be reconstituted as follows,
with effect from 23 February 2018:
- Sipho Nkosi, Octavia Matloa and Khetiwe McClain have resigned as independent non-executive directors;
- Bernard Swanepoel will step down as executive chairman;
- Clinton Halsey will step down as interim chief executive officer and chief investment officer;
- Jannie Serfontein will be appointed as chairman;
- Frank Davidson, Nelis Leonard and Fedja Basic will be appointed as directors of eXtract.
The eXtract board will review the composition of the eXtract board and board committees as well as the roles of the
eXtract directors, in particular which directors will fill the positions of chief executive officer and financial director, to
ensure compliance with the JSE Listings Requirements and will look to appoint at least one further independent non-
executive director. A further announcement will be released on SENS in due course.
Both Bernard Swanepoel and Clinton Halsey have agreed to significantly shorten the contractual notice periods for the
termination of their employment with the Company which will result in a significant cost saving to the Company.
The eXtract board thanks the outgoing directors for their valued service to the Company under difficult circumstances.
During the tenure of the outgoing directors eXtract was transformed from a heavily geared, loss-making contract miner
to an investment company through the termination of non-profitable contacts and sale of excess mining assets ahead of
schedule. To this end, the outgoing board has overseen:
- the responsible termination of the Company’s mining contracts with Tharisa, PPM, Mogalakwena and Aganang
and sale of assets in a manner which sought to minimise the impact on existing mining operations and the eXtract
staff that was employed at such mining operations;
- the restructure and recapitalisation of eXtract which ultimately resulted in R1.877 billion of debt from enX Group
Limited (“enX”) being converted to equity and unbundled to enX shareholders;
- the repayment of all eXtract bank debt;
- the repayment of the first R100 million of the R250 million enX loan (the “enX loan”); and
- significant reductions in the Company’s overhead costs and structure.
Exit of eXtract’s investment in the Last Mile Fund
As part of eXtract’s revised strategy to return capital to shareholders, the eXtract board has resolved to terminate its
investment in the Last Mile Fund, announced on SENS on 31 October 2017. To this end, the Last Mile Fund has
concluded a repurchase agreement with Newshelf 1396 Proprietary Limited (“Newshelf”), a wholly owned subsidiary
of eXtract, in terms of which the Last Mile Fund will repurchase all of the shares in Newshelf previously issued to
Newshelf for a repurchase consideration of R25 million (the “repurchase consideration”). The repurchase is subject
to the fulfilment of a condition precedent that by not later than 31 March 2018 all authorities needed to the implement
the repurchase have been obtained.
The repurchase consideration will be paid by the Last Mile Fund to Newshelf (together with interest thereon at the prime
rate of interest, calculated monthly in arrears on the balance) in three annual instalments each equal to one third of the
repurchase consideration (plus accrued interest), payable on the first, second and third anniversaries of the closing date,
being the 1st business day after the condition to the repurchase agreement has been fulfilled.
The repurchase agreement contains terms and warranties that are normal for a transaction of this nature.
The transaction is categorised as a category 2 transaction in terms of the JSE Listings Requirements for eXtract and
accordingly does not require approval by eXtract shareholders.
The value of the net assets disposed of in terms of the transaction is R25 million, being the repurchase consideration.
The proceeds of the sale will be used to return capital to eXtract shareholders as part of eXtract’s revised strategy.
The eXtract board has resolved to repay a further R75 million of the enX debt, bringing the outstanding balance of the
enX debt down to R75 million.
23 February 2018
Sponsor
Java Capital
Legal advisor
enS Africa
Date: 23/02/2018 02:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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