- February 12, 2007
- Posted by: admin
- Category: General
Statement by HCI in response to Articles Appearing in Business Report on 11th and 12th February 2007
1. HCI released an announcement on SENS on 18 January 2007 advising that the Mpumalanga Gambling Board (MGB) had refused HCI’s application for approval of its acquisition of a 50% stake in Fabcos Investment Holdings (FIH). In that release HCI stated its intention to take legal steps to protect the company’s interests. This still remains HCI’s intention and its point of view on the matter will then be fully set out.
2. The letter concerned from the MGB does not state the facts or findings of fact that lead it to the conclusions at which it arrived. Defending oneself against the letter is, in the circumstances, virtually impossible. For this reason, HCI has filed with the MGB a request for the factual findings and conclusions drawn there-from, but to date has not received further advice from the Board.
3. Nafhold has consistently objected to the applications that HCI has lodged with the various relevant Gaming Boards. The MGB copied the objector Nafhold with its letter. The letter was released to the Business Report shortly in advance of a discussion by the Nafhold Board on HCI’s offer to Nafhold shareholders. We believe the release should be understood in the context of efforts by certain Nafhold representatives to resist that offer.
4. We believe HCI was entitled to be protected by the MGB from its correspondence being prematurely released to the public and that the failure of the MGB to caution Nafhold in this regard has been highly prejudicial to HCI and its shareholders. HCI has been placed in a position where it must either debate the merits of its legal proceedings in the press without even having certainty of the case it has to meet or be damned by its silence on the most scurrilous headlines appearing in the business press.
5. In general, the issues in the letter from the MGB correspond to the points of opposition raised by Nafhold before all the relevant Gaming Boards over the last eighteen months. While point 2 above remains central, it does appear that the MGB is in agreement with these objections and on that assumption we make the following general and broad response:
5.1 Nafhold’s objections were considered by two other regional Gaming Boards in KwaZulu-Natal and the Eastern Cape who both approved the HCI application. 5.2 To the best of our knowledge, there are no new facts or allegations that surfaced before the MGB and some issues, for example relating to “manipulation of BEE credentials” and “misrepresentation or omissions of important information”, appear to relate to an entirely different transaction arising from HCI’s efforts to stop Johnnic’s use of HCI’s BEE status in Johnnic some 18 months ago and the wording chosen in a letter in relation thereto submitted by our attorneys to the MGB in June 2005.
5.3 We note that HCI’s 25% shareholding in Johnnic satisfied the MGB that Johnnic was sufficiently empowered to acquire the other 50% of FIH, and we believe that HCI itself will be found to be so in due course.
5.4 We are confident that a court of review will find the fact that the Minister of Defence held 1000 HCI shares until the matter was drawn to his attention whereupon he disposed of them, an inadequate reason for debarring HCI’s application.
5.5 Issues surrounding Nafhold’s erroneous belief that it was entitled to a dividend instead of TIH paying off its debt to ABSA will, in our view, in due course also be found to be an inappropriate criterion for adjudicating HCI negatively.
6. While HCI is most concerned about misrepresentations of our actions and credentials in the recent press, we have been advised that it is inappropriate to comment further ahead of legal proceedings.
Issued by HCI
12th February 2007