Trading in MGX`s share has been suspended at the request of the company`s board, which says the move came because shareholders are misinterpreting working capital adequacy statements.
At the centre of the matter is a notice MGX published last week, saying that its working capital would be adequate until 17 October.
The group says it sent a circular to shareholders on 3 October, in which it provided details of the disposal of four subsidiaries for consideration at the general meeting scheduled for 23 October.
JSE rules required it to publish a working capital statement in the circular confirming the adequacy of the working capital until a stated date.
"In this context, MGX provided a working capital adequacy statement in the circular advising shareholders that the company`s working capital would be adequate until 10 October 2003," it says.
Last week it informed shareholders it was of the opinion that the working capital, ordinary share capital and resources would be adequate until 17 October and that talks with capital providers relating to debt refinancing and raising additional facilities were still in progress.
MGX says although it has sufficient facilities for its immediate working capital requirements, it is dependent on the successful outcome of the negotiations. Because of this, it is not in a position to confirm its working capital adequacy for more than a week at a time.
"However, MGX`s interactions with its stakeholders over the past two weeks have indicated that weekly working capital adequacy statements are being misinterpreted.
"Therefore the board deemed it preferable to request the JSE to suspend the listing of the company`s share until final and binding unconditional debt refinancing agreements have been concluded and support from the majority of MGX`s shareholders has been secured."
Once this has occurred, it says, it will be able to issue a positive working capital adequacy statement for the remainder of the current financial year.
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