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Blue eyes huge loss

Johannesburg - Blue Financial Services [JSE:BFS] advised shareholders on Tuesday that it expects a loss of between R1bn and R1.05bn for the year ended February 2010.

This translates into a basic loss of between 166.93c and 175.28c per share and a headline loss of between 131.64c and 139.99c per share attributable to ordinary shareholders, compared to the restated basic earnings per share and restated headline earnings per share of 15.92c and 12.73c respectively, for the previous year.

Last week Blue announced a proposed recpitalisation of the company through a combination of equity and debt funding from Mayibuye that will see the  latter become the majority shareholder in Blue.

Blue has entered into a subscription agreement with Mayibuye. In terms of this, Mayibuye will subscribe for ordinary shares in Blue, by way of a specific issue of shares for cash at an issue price of 13c per Blue ordinary share, for an aggregate subscription consideration of R163m. 

In addition, Mayibuye will provide debt funding on an arm's length basis to Blue in the amount of R300m on commercial terms.

"The recapitalisation is subject to a number of conditions precedent, which include inter alia securing irrevocable undertakings from the majority of the company's shareholders, agreeing restructuring agreements with the company's current debt funders, obtaining shareholder as well as all necessary regulatory approvals (as required).

"Following the implementation of the recapitalisation, Mayibuye will become the majority shareholder in Blue and it is Mayibuye's intention to restructure both the board and management of Blue, as well as implement a turnaround strategy for the company," Blue said.

 - I-Net Bridge

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