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[Bizcom]

Ich habe heute diese Mail bekommen,wird jemand daraus schlau?Mit meinem Englisch sieht`s nicht so gut aus.

SHAREHOLDER UPDATE


To: All Shareholders
From: Board of Directors, KoreaOnline Limited (“KOL”

For some months, KOL has been in dispute with the iRegent Group (“iRegent” over certain corporate governance issues. As a result, KOL is now managed completely independently of iRegent which no longer has any board or management representation in KOL or its subsidiaries. iRegent remains a passive shareholder in KOL, owning 40% of KOL. An exactly equal 40% stake is held by the State of Wisconsin Investment Board (“SWIB” acting with Tong Yang Investment Bank (“TYIB”. A number of shareholders have been selectively solicited to sell their shares in KOL. This approach is part of an attempt to revert control of KOL from the current management that has successfully turned KOL around over the past year to the management that was responsible for managing KOL when it suffered its setbacks in 2000. Furthermore, the price being proposed to such shareholders significantly undervalues KOL. Shareholders are being invited to sell their shares just at the time when all the turnaround work of the past year is bearing fruit; net asset value is rising strongly as are profits. We urge shareholders to think carefully before accepting any offer and the following update is designed to demonstrate to shareholders the existing value of KOL, which has risen significantly over the past year, and also the more positive value that we believe will materialize over the course of 2002.

Shareholders should also note the following:
1. A wholly owned subsidiary of iRegent is seeking to purchase 11.3% of KOL from selected minority shareholders on behalf of an unnamed Asian financial institution. This actually represents 58% of the 20% minority stake in KOL which we believe will be hard to achieve based on indications of support already received for existing management.
2. We understand that the management and directors of iRegent are being offered a separate transaction that values KOL at a higher price than is currently being offered to KOL shareholders.
3. The offer to KOL shareholders effectively amounts to using shareholders’ own money to buy them out since the proposed transaction amounts to a leveraged buyout using KOL’s own resources.
4. iRegent is aware of the higher value of KOL at the current time and is not communicating that material fact to shareholders.

Current Management and Board:
For the past year, KOL has been led by Peter Everington and Romi Williamson. Peter was a non-executive director of KOL at its inception and was responsible for raising the majority of the capital behind KOL. As shareholders will be aware, from the March 2001 annual report and the September 2001 interim report, KOL’s problems surfaced in November 2000 when three illegal loans to a former shareholder of KOL (Mr. Seung-Hyun Jin) became public knowledge, thereby precipitating a run on KOL’s banking subsidiary and ultimately the failure of KOL’s insurance subsidiary. At the time, the authorities in Korea issued a summons to Mr. Jim Mellon, then Chairman of KOL, to come to Korea to answer allegations of share manipulation involving shares in KOL’s securities company subsidiary. Mr. Mellon refused to come to Korea, resulting in an arrest warrant being issued against him. We understand that the arrest warrant was renewed in January 2002.

As a result, Peter Everington took over as Chairman of KOL in December 2000 and later became CEO in April 2001. Romi Williamson became an executive director of KOL in January 2001. She has a background in accountancy, is also a qualified barrister and formerly worked for the Hong Kong Securities & Futures Commission. She has been responsible for resolving successfully the many difficult legal issues that KOL has faced and has also regained the confidence of the regulators of KOL’s businesses in Korea. In January 2002, three independent non-executive directors were appointed to the board of KOL particularly to advise KOL given the increasing conflicts of interest that have arisen with the iRegent Group which owns 40% of KOL and was responsible for managing KOL at the time it suffered its problems. These three new directors are:
Mark Hanson - Former deputy CEO of the Hong Kong Stock Exchange and a qualified lawyer
Jonathan Beatson-Hird - Formerly with ING Barings in New York and Deutsche Morgan Grenfell. Now a founding partner of New Boathouse Capital, a specialist corporate advisory group.
Francis Sullivan - A qualified barrister and a consultant to a number of financial groups, particularly in the insurance field. He has been a consultant to KOL in the past and is well familiar with KOL and with the operational environment in Korea.

Restructuring of KOL:
In December 2000, KOL had debts of US$28m and the market value of KOL’s assets was just US$24.8m. At the same time, all the credit lines within the KOL group were withdrawn by KOL’s bankers and other lenders. Had it not been possible to hold off the creditors at that time for long enough to complete the subsequent restructuring, KOL would likely have gone bankrupt in 2001.

Today, KOL has debts of less than US$3m and the Net Tangible Asset Value (“NTA” of KOL (referring to KOL’s end February 2002 management accounts) is now US$228m, equivalent to US$5.09 per share. For clarification, NTA represents management’s assessment of the hard cash value of KOL, with all assets and liabilities marked to market, and excluding goodwill. Over the past year, the reconstruction of KOL, led by Peter Everington, has resulted in NTA per share increasing by 86% and has involved the following steps:
Nov 2000 - Successful acquisition of control of Ileun Securities by KOL in partnership with the State of Wisconsin Investment Board (“SWIB” – this has contributed significantly to the reconstruction of KOL.
Mar 2001 - Conversion of SWIB’s interest in the financing vehicle for the acquisition of Ileun into new KOL shares.
Apr 2001 - Significant staff reductions thereby eliminating most operating expenses at KOL
Apr 2001 - Secured absolute control of Ileun Securities against strong union opposition
May 2001 - Recovery of US$6m cash by selling the equity of KOL’s failed insurance subsidiary
May 2001 - Closed KOL’s asset management company to preserve cash
Jun-Sep 2001 - Negotiated significant creditor discounts at KOL
Jun 2001 - Merged KOL’s banking subsidiary with TongYang Merchant Bank
Aug 2001 - Refinanced KOL via the issue of a US$9m bond to Tong Yang Merchant Bank
Jan 2002 - Resolved a strike at Ileun Securities securing a 2-year “no strike” agreement and a wage award well below industry average
Jan 2002 - Merged Ileun Securities with Regent Securities to form the newly named Bridge Securities Co., Ltd (“Bridge” which is 66% owned by KOL and is now KOL’s main asset. The merger also resulted in a significant uplift to KOL’s NTA
Feb-Mar 2002 - Restructured Bridge’s management and integrated two companies into one HQ. Embarked on major IT upgrade as well as re-branding and re-positioning of Bridge. The merger is also capturing significant synergies as well as numerous outright cost savings.

Valuation of KOL:
As at December 2000, KOL’s Net Asset Value (“NAV” was US$160m and NTA was US$106m. However, on a market value basis, KOL was arguably bankrupt and was certainly facing a critical liquidity crisis as a result of the withdrawal of all credit lines throughout the KOL group. The progression of KOL’s NAV and NTA has been:
Date NAV NTA NAV per share NTA per share Shares issued
Mar 2000 $278.0m $204.2m $7.16 $5.26 38.808m
Sep 2000 $217.0m $100.3m $5.59 $2.58 38.808m
Dec 2000 $160.4m $106.3m $4.13 $2.74 38.808m
Mar 2001 $176.2m $177.4m $3.93 $3.96 44.808m 
Sep 2001 $184.4m $195.5m $4.12 $4.36 44.808m
Feb 2002e $191.5m $228.2m $4.27 $5.09 44.808m
Pursuit of Mr. Seung-Hyun Jin:
Mr. Jin is currently in jail serving a 7-year sentence for his crimes including those that damaged KOL. KOL holds a personal guarantee from him for the debts he extracted from KOL’s subsidiary and is in the process of seeking recovery of that money. Recently significant headway has been made in this regard. Successful recovery could add 5-10% to the value of KOL. If we were able to secure a damages award as well, the recovery would be more significant.

Outlook:
Your management is currently working on two transactions which, if successful, will add significantly to the net tangible value per share of KOL. The first transaction will, if fully successful, add more than US$50m to the value of KOL, thereby raising NTA per share by a further 22% from its current level. The time horizon for this project is six months. The second transaction, if successful, would add around US$20m to the value of KOL. Furthermore, the second transaction would be part of establishing an exit mechanism for shareholders. This second project is planned to be completed in 2002.

At the same time, the profitability of Bridge is now rising strongly. In the first two months of 2002, net profits exceeded US$12m. Although not all of that is recurring profit, it is clear that Bridge is now operating at a significantly higher profit level than it did in 2001, prior to its merger.

Although management discusses values in terms of NTA, sales of such businesses are usually done at premiums to NTA. It is the view of your board that KOL could command a premium of 30-40% to NTA within the timeframe of a year. That judgment is based on blending the fact that securities companies in Western economies typically change hands at valuations exceeding 2x NTA, with the fact that leading securities companies in Korea are valued by the market at between 1x and 2x NTA. Shareholders should note that, whereas Ileun and Regent Securities were relatively minor companies within the Korean Securities industry, the merged Bridge Securities is now the 8th largest company by balance sheet and the transactions referred to above would, if successful, place KOL within the top 5 by balance sheet. We believe that such a level equates to critical mass for the business at which stage such premiums can be commanded.

Summary:

1. On the table is a cheeky bid for selected shareholders valuing KOL at US$4.20 per share with conditions attached such that shareholders would not receive their money until end May. We believe this significantly undervalues KOL.

2. Against that, KOL already has an NTA per share of US$5.09. Underlying that Bridge has cash of US$150m and little debt. This valuation is very robust and is 21% above the outside offer.

3. Two transactions in process would add around US$70m in value to KOL, if successful, taking NTA per share to US$6.65 per share. Ongoing profitability in Bridge is expected to add further to this figure.

4. The board of KOL is committed to achieving an exit mechanism for shareholders within 2002.

5. The board believes that a valuation of 1.35x NTA should be achievable within this time frame and that would value KOL at around US$9 per share. Ongoing profitability and any recovery of the loans that caused KOL’s problems would be additional to this.

6. The management and board of KOL enjoy the full support of SWIB and TYIB accounting for 40% of the shares in KOL. We do not believe that the current offer will succeed, nor do we believe that it is in the best interest of all shareholders generally.

7. Although US$4.20 per share represents the only cash offer currently available, as far as we are aware, we do believe that shareholders will be able to realize a significantly higher amount within 2002.

8. The Korean economy and market has only recently begun to turn up after facing difficulties in 2000 and 2001. This upturn is just four months old so far and we believe that investors would be selling too early relative to that given that upturns typically last for 1-2 years.

This report is approved by the entire board of KOL. The current management has succeeded in turning KOL around and has raised NTA per share by 86% since Dec 2000 through their efforts. We believe this success will continue and deserves to be supported by shareholders. Any shareholder wishing to ask any questions can contact the directors as below.

Peter Everington, CEO [Tel: [phone], Mobile: [phone], email: [e-mail]]
Romi Williamson, Executive Director [Tel: [phone], Mobile: [phone], email: [e-mail]]
Jonathan Beatson-Hird, Independent Director [email: [e-mail]]
Mark Hanson, Independent Director [Tel: [phone], Mobile: [phone], email: [e-mail]]
Francis Sullivan, Independent Director [Mobile: [phone], email: [e-mail]]

* * * * * * * * * * * * * * * * * * *

The above material is prepared in good faith based on the statutory and management accounts of KOL and Bridge as well as other information believed to be correct at the time of writing. The forecasts are based on specific plans currently being implemented. However, there is no guarantee that such plans will be successful or can be completed within the timeframes mentioned.

[DieFilzlaus]

Lies doch lieber wieder mal ein gutes Buch ...
und zwar in deutsch. Deutsch ist eine wunderbare Sprache.
So leicht verständlich und auszusprechen. Eben unsere
Muttersprache ! Forget englich oder denglich !
Freu Dich daß du Deutscher bist !