MGX says it will continue to implement the recovery plan drawn up by former advisor FRM Strategies, including selling off various subsidiaries.
The embattled group was hit this week by the news that FRM Strategies, appointed at the end of last year to return MGX to profitability, had chosen not to renew its contract.
FRM Strategies principal Peter Flack also resigned as interim CEO of MGX after failing to reach agreement with MGX`s bankers on a plan to restructure debt.
Flack was insistent that MGX could survive only if between R130 million and R150 million of its debt, which stands at almost R450 million, were converted to equity.
Yesterday the banks - BoE, Citibank, Investec, Rand Merchant Bank and SCMB - extended the R100 million loan facility granted earlier and agreed to a refinancing plan.
The bankers and capital providers also agreed to a five-year refinancing plan in terms of which the MGX bankers will convert about R210 million of the company`s debt into a range of redeemable convertible instruments to be issued by an MGX subsidiary.
In addition, the bankers and capital providers will convert about R118 million of debt into redeemable convertible instruments to be issued by MGX.
This will leave a debt balance of about R120 million, to be assumed by MGX`s Metrofile division.
MGX director Roy Midlane says while the conversion to equity would have been a better option for the company, the banks were not prepared to take the risk.
"There comes a point where a line gets drawn in the sand," he says.
MGX has appointed Christopher Seabrooke as non-executive chairman, but has no plans yet to name a CEO.
Midlane says Seabrooke is returning from Europe at the end of the week, when a board meeting has been scheduled. The issue of a CEO will be discussed then.
Part of FRM`s strategy involved the disposal of several subsidiaries in a bid to reduce debt levels. Midlane says this will continue.
Asked whether any other aspects of FRM`s strategy would change, he says there are no plans to make any other material changes.
"FRM did some good groundwork," he says.
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