EDWAFIN INVESTMENT HOLDINGS LIMITED

(IN LIQUIDATION)

FIRST CIRCULAR TO ALL DEBENTURE HOLDERS AND CREDITORS

DATED 2 JUNE 2009

THE JOINT PROVISIONAL LIQUIDATORS DETAILS : -

Graham Perry
c/o GPA
No. 10b, Village Office Park
2 Inkonka Road
Kloof, 3610
Tel : (031) 764 4118
Fax : (031) 764 4124
E-mail : mail@grahamperry.co.za

Pierre Berrange Thamsanqa Mshengu

c/o Berrange Incorporated c/o Mshengu Insolvency Practitioners
Suite 1, The Mews, Redlands Estate 64 Old Main Road
1 George Macfarlane Lane Bothas Hill
Pietermaritzburg Durban
3201 Tel : (031) 765 6195
Tel : (033) 3455331 Fax : (031) 765 6199
E-mail : taryn@b-inc.co.za E-mail : thami@mshengu-ins.co.za

Edwafin Investment Holdings Limited (hereinafter referred to as “Edwafin”) was placed into provisional
liquidation by the High Court of South Africa, Kwazulu-Natal Pietermaritzburg Division, on Friday the 22nd
of May 2009, pursuant to an application brought by Dorothy Jean Griffin for the winding up of the
Company.

The Master of the High Court appointed Pierre de Villiers Berrangé and Thamsanqa Eugene Mshengu as the
Joint Provisional Liquidators on an urgent basis on Monday the 25th of May 2009. Graham Bryan Perry was
joined as a Provisional Liquidator on the 28th of May 2009.

The application papers for the winding up of the Company were issued on the 16th of February 2009 and as
such, the deemed date of liquidation is the 16th of February 2009. The liquidation application was opposed
by Edwafin, who proposed that it rather be placed under judicial management. The Court granted the
Provisional Liquidation Order and the return date for the Provisional Order to be made final is the 2nd of July
2009.

A: ASSETS

In the short space of time since the Joint Provisional Liquidators appointment, the following have been
identified as the assets of the Edwafin: -

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1.1 Office furniture and computers

1.2 Generator
1.3 Derivative Investments in U.K
1.4. Shares and loan accounts in the following private companies : -

1.4.1 Dynamic Motor Company (Pty) Limited;

1.4.2 Rainbow Paints and Adhesives (Pty) Limited;
1.4.3 Alexia Investments (Pty) Limited;
1.4.4 Ruwenzori Property Options (Pty) Limited;
1.4.5 Ruwenzori Trading (Pty) Limited t/a DTV;
1.4.6 Edwafin Debenture Holdings (Pty) Limited;
1.4.7 Edwafin Capital Options (Pty) Limited;
1.4.8 Restore I.T. (Pty) Limited.

1.5 Share and loan accounts in the following companies registered abroad : -

1.5.1 Protea Trading (Pty) Ltd

1.5.2 Edwafin PLC in Ireland
1.5.3 American Company – Details unknown at this stage.

The value of these assets at face value based on the collectability of same and the net asset value of the
private companies are as follows : -

2.1) Office equipment and computers - R270,000.00

(as per valuation obtained by Joint Provisional Liquidators)

2.2) Generator - R 90,000.00

2.3) Computers, CCTV cameras (not yet valued) - R100,000.00

2.4) Derivatives in U.K. - RNil

(the UK company with whom the derivative investment
was purportedly held, has been liquidated and the expected
dividend to creditors in that estate is nil – This disposal is being
thoroughly investigated)

2.5) Shares and loan accounts in various private companies

in which Edwafin is the 100% shareholder or majority
shareholder

2.5.1) Dynamic Motor Company (Pty) Ltd (DMC)

Edwafin holds 90% of the shares. This is the main asset in the estate. Notwithstanding
investments by Edwafin of R106 Million initially in Ruwenzori Trading (Pty) Ltd t/a DTV
which transferred the motor vehicle concept to this entity, DMC, its value is negligible.
DMC developed, designed and assembled the Damara motor vehicle. The assets of DMC
are valued by the Directors at approximately R800,000.00. The creditors are R1,2 Million
plus the Company’s claim of R27 Million. This entity is clearly insolvent and may well
have to be liquidated. The potential recovery to Edwafin, after costs, in the entity is
estimated at R250,000.00.

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2.5.2) Rainbow Paints and Adhesive (Pty) Ltd

Edwafin holds 90% of the shares. The business was sold out of Edwafin on 9 February
2009. The Joint Provisional Liquidators are carefully examining this transaction and to
establish whether the sale was properly authorised. If the transaction was not properly
constituted an amount of R1,000,000.00 could become available to Edwafin.

2.5.3) Alexia Investments (Pty) Ltd

Edwafin holds 100% of the shares. The only asset is an immovable property. The shares of
Edwafin were sold and R650,000.00 of the R1,85 Million purchase price has been paid.
The balance of the purchase price is to be paid to First National Bank who hold a bond over
the property as a preferent creditor. This is an executory contract and the Joint Provisional
Liquidators must decide to abide by or terminate the contract. The net equity of the
company, presuming that the transaction does not proceed, is R650,000.00.

2.5.4) Other companies referred to in para 1.4.4 to 1.4.8

These are dormant companies with no assets and no equity.

2.5.5) Foreign companies referred to in para 1.5

The net asset value of these companies is not yet known. We are investigating this.

From the above you will note that Edwafin’s assets are predominantly shares and loan accounts in entities.
Certain of these entities will need to be dealt with by further liquidations and disposals by those companies.
These are lengthy processes with funds only accruing to Edwafin, months if not years, from today’s date.
Edwafin’s bank account is overdrawn and staff, who were still working on 23 May 2009, have not been paid
since 31 March 2009.

B: LIABILITIES :

The liabilities of the Company are as follows :

a) South African Revenue Service R 1,481,750.00

b) Staff R 600,000.00
c) Debenture holders R199,613,617.00
d) Loan Account Creditors R 10,665,275.00
e) Redeemable Preference Shares R 16,099,911.00

Total R228,460,553.00

C: RECOVERY FOR DEBENTURE HOLDERS AND CREDITORS

Based on the current scenario, there is no prospect of a dividend. Unless our investigations uncover
further assets, there is no likely recovery for debenture holders and creditors, as staff claims and the
claim of SARS must be paid in full before any other creditors are paid as they are preferent.

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D: FORENSIC AUDIT / ENQUIRY

The Joint Provisional Liquidators have taken control of the assets, as they are obliged to do as
caretakers, including the computer records. The computer records have been downloaded, backed up
and imaged to preserve same. It appears to the Joint Provisional Liquidators that a forensic audit
will be required to interrogate the accounting records and witnesses will be required to testify in
terms of Section 415 or 417 of the Companies Act. This is a costly exercise and can only be
undertaken if there are funds available to Edwafin and/or creditors and/or debenture holders agree to
fund such costs. Once the Joint Provisional Liquidators have a more accurate assessment of the
assets and the liabilities, this matter will be addressed further.

E: INSURANCE POLICY

Edwafin had Professional Indemnity Cover limited to R20 Million. The insurers have been notified
of the liquidation and that the Liquidators are actively obtaining information to see if this claim can
be pursued.

F: CRIMINAL INVESTIGATION

The Commercial Crime Unit KZN had commenced investigating Edwafin before liquidation. The
Joint Provisional Liquidators have had various meetings with them to share information and to
establish what action, if any, needs to be taken.

G: WEBSITE

With over 1400 investors, many of whom do not have e-mail addresses, communication is going to
prove difficult. Edwafin had a website which is no longer working. The Joint Provisional
Liquidators are in the process of creating a website called edwafinliquidation.co.za. This site will be
updated regularly to keep creditors informed of developments and provide general information.

H: LIQUIDATORS’ FUNCTIONS

The Joint Provisional Liquidators’ functions are to be split as follows : -

1. Administrative functions will be attended to by GPA. This includes progress reports,

circulars, claim documents and general administration.

2. Legal and forensic investigation will be attended to by Berrange Incorporated, assisted by

Mshengu Insolvency Practitioners. This includes the interrogation of the accounting
records and the legal enquiry which will be held.

As such please direct all your queries and correspondence which is not related to the actual
investigation to GPA.

I: FURTHER REPORTS

Please provide GPA’s offices with your contact detail, preferably an e-mail address. Reports will be
sent out from time to time and posted on the website.