MGX sheds more subsidiaries

By Iain Scott for MGX Holdings

Johannesburg, 25 Aug 2003

MGX Holdings has entered agreements to dispose of several subsidiaries as part of its recovery programme.

Continuity planning solutions company MGX Business Continuity Solutions (BCS) is to be sold to ContinuitySA for R60 million. ContinuitySA will also assume liabilities including operating leases.

MGX says the funds will be used to reduce its interest-bearing debt by R57.5 million. Together with the assignment of the operating leases, the BCS disposal will cut interest-bearing liabilities by about R82.5 million.

MGX`s 50% share in Drive Control is being transferred to the Nerex Trust in terms of a settlement agreement with regard to a legal dispute between MGX and the Drive Control Consortium.

The group is also disposing of Storage Solutions and Professional Services to King-At-Arms Holdings, which is wholly owned by Storage Solutions CEO Dan McMahon.

The companies are being sold for R1 each. MGX says Storage Solutions will reduce its indebtedness to MGX by R4 million before the effective date of the deal.

The group says the various disposals are all in line with its recovery plan aimed at returning MGX to profitability by, among other things, creating a smaller group that can be rebuilt over two to three years into a profitable business.