Chairman's 2003 AGM Report
12 September 2003
12 September 03
Chairman's 2003 AGM Report
Dear Shareholder
Over the past six months the Board and management of IT Capital have considered the strategic options available to the company to enable it to build value.
The environment in which these exercises have taken place has been difficult. Venture capital companies that have backed information technology enterprises over the past few years have a dismal performance record, and IT Capital has been one of these.
Adding to our troubles has been the claim for the return of the company’s shares in Deep Video Imaging Ltd by the
seller in 2000, Power Beat International Ltd. These claims are being vigorously defended by IT Capital, but the legal costs involved are significant.
The company now has just three investments. We hold minority interests in Deep Video Imaging Limited and Golden Orb Limited. We do not expect to invest further into these two companies. We hold a majority shareholding in Sealegs International Limited (“Sealegs”), a company that we have advanced $697,081.36 to since we acquired it in August 2002. We intend to invest further into Sealegs to enable it to begin production.
In order to raise capital to fund the company and further fund Sealegs, the Board intends to undertake a one for one renounceable rights issue to all existing shareholders of the company at an issue price of $0.00165 per share. It is anticipated that this rights issue will raise approximately $500,000 (less associated costs). The issue price has been set to encourage your participation.
In addition to the rights issue, the following transactions are proposed by the Board ( the “Transactions”):
• The entry by the company into an underwriting arrangement under which the rights issue will be fully underwritten
by our two principal shareholders, the McKee Wright Family Trust and the Bryham Family Trust. No fees are being
paid to the underwriters;
• That Sealegs International Limited enter into a management contract with Platinum Management Limited.
This management contract will be on substantially the same terms as the management contract between the
company and Platinum Management Limited which was terminated earlier this year except that no options to
purchase shares in the company will be available to Platinum Management Limited;
• That the company capitalise its existing $697,081.36 loan to Sealegs by subscribing for 114 new shares in Sealegs
for an issue price of $6,114.75 per share;
• That the company acquire the remaining 14% of Sealegs not already held by the company thus making Sealegs
a wholly owned subsidiary of the company; and
• That the company issue a total of 60,998,000 shares (with an ascribed value of 1 cent each) as consideration for
the purchase of the remaining Sealegs shares referred to above.
The Transactions are being put to you as the company’s shareholders for approval. The Transactions are linked transactions. That is, the completion of one transaction will not occur without the completion of the other four transactions.
This restructuring of Sealegs and the capital raising exercise through the rights issue is intended to prepare Sealegs to launch its first boats onto the market both in New Zealand and internationally.
You will find enclosed the company’s notice of annual general meeting setting out various resolutions to be put to shareholders at the annual general meting, including resolutions to approve the Transactions. You will also find enclosed an appraisal report on the Transactions.
We urge shareholders to vote in favour of the resolutions that support the Transactions as we consider this to be in the best interests of the company.
Thank you for your continued support.
Yours faithfully
John Robertson
Chairman
