Statement by the Board of Directors of the Companies in the Sharemax Promoted Portfolio of Companies

The board of the Sharemax related companies currently operating under the directive of the South African Reserve Bank (the SARB), is pleased to announce that good progress is being made with the proposed Schemes of Arrangement Process. The board remains convinced that this Process provides the best solution and protection to investors and other interested parties.

In previous press releases the board reported that the relationships between the various entities related to the Sharemax promoted portfolio of companies (the companies), are complex and in some instances uncertain. Due to these complexities, the board has decided to propose Schemes of Arrangement in respect of the companies, in order to restructure the financial affairs of the companies to the best benefit of investors and other interested parties (“the Schemes”).

A likely alternative to the proposal of the Schemes may be the liquidation of some or all of the companies, which will inevitably result in significant losses to investors and other interested parties. It is commonly known that a liquidation process has no result, other than causing substantial losses, as a result of the very process of liquidation, and the forced sale scenarios, inevitably associated with a liquidation process.

In addition, investors and other interested parties, including financial advisors having advised investors to invest in the Sharemax promoted portfolio of companies, need to be cognisant of the following. Should the board be unsuccessful in restructuring the affairs of the companies to the extent that any unlawful structures associated with the companies are not rectified by virtue of the proposed Schemes, the business conducted by the companies prior to the directives having been issued by the SARB, may be determined as having formed part of possible illegal scheme. The effect this off may well be that investors who had received income under such a possible illegal scheme, may be required to repay prior income received.

The same applies in respect of financial advisors, having received commissions on their activities in promoting the business of the companies, and having advised their clients to invest in the Sharemax promoted portfolio of companies. In short, financial advisors may well face the possibility of having to repay their commissions and/or face possible litigation, based on advice provided to investors, to invest in such a possible illegal scheme.

Furthermore, should the board not be determined and resolute in its attempts to restructure the affairs of the companies in the aforesaid manner, or be unsuccessful with the proposing of and having the Schemes sanctioned by the High Court, the board will have no alternative but to report to the SARB that it has been unsuccessful. In this event, the SARB may well instruct the board to comply immediately with the directives of the SARB, to the extent that all monies invested in the various projects undertaken by the Sharemax promoted portfolio of companies, will have to be repaid.

Since it will be practically impossible to “repay all monies”, the only alternative will be the liquidation of some or all of the companies, with the consequential serious negative impact on interests of investors and other interested parties. A liquidation process, as opposed to a successful restructuring of the affairs of the companies, so as to eradicate any possible illegality, will undoubtedly bring with it, the extremely negative effects of illegality as referred to above. Moreover, in specific circumstances, the SARB may decide not to opposea liquidation application by other parties, should the board not be able to present an acceptable plan(s) that are approved by the relevant stakeholders.

The board is aware of the creation of forums and pressure groups which purport to represent certain “interest groups”. The board is willing to engage with credible support groups provided they are properly constituted, representative and with credible objectives.

However, the board is concerned that the creation of some of these groups are designed to jeopardise or undermine the progress made so far. It is also clear to the board that the demands and proposals by some of these groups are impractical and based on a misunderstanding of the issues regarding the legal consequences of and the board’s intentions with the proposed Schemes.

Rumours to the effect that the board refuses to consider reasonable offers on properties are also factually incorrect. The board has received various offers and where these offers were considered reasonable and in the best interests of the companies, the necessary steps were taken to eventually sell these properties as part of the Schemes. Furthermore, the board is legally and duty bound at all times to act in consultation with the SARB appointed statutory managers and to obtain approval from them in regard to all actions of the board relating to its dealings with assets of the companies.

The board is also aware of a process attempting to replace the current board of directors. As part of the Schemes, investors will get the opportunity to ratify the appointment of the current board or to replace the current board with other directors. Attempts to force such a change prematurely could contribute to the derailment of the existing process, will be resisted.

The board is also concerned that attempts to replace the current board is driven by parties having agendas other than those of the board, and in particular, agendas aimed at either liquidating the companies and/or utilising the assets of the companies in a manner and to the effect which will be less beneficial to the interests of the investors and other interested parties. The board’s aims and activities are primarily intended to serve the best interests of investors and other interested parties, with a view to providing the best possible financial benefit to investors and other interested parties, without personal gain to the members of the current board and most certainly with a view to averting the losses undoubtedly associated with any liquidation process.

The board is also aware of actions by certain pressure groups and/or individuals, including attorneys, to solicit proxies from investors. The board urges investors to study the Schemes of Arrangement documentation as soon same are available before signing any proxies. The Schemes of Arrangement documentation will include proxy forms, should investors wish for someone else to represent them at the upcoming meetings of investors, following the implementation of the Schemes.

Any mooted “judicial management process” is concerned, the board advises that it has carefully considered this, and has also taken extensive professional advice in regard thereto. Investors are again cautioned against supporting such a process, as it is the considered opinion of the board that this process is nothing more than a carefully designed action aimed at ultimately procuring the liquidation of certain of, if not all, of the companies. Clearly, the intention is to benefit, not investors, but liquidators and parties affiliated to liquidators whilst ignoring the serious negative effects of a liquidation process, including exorbitant fees and expenses to be paid, to liquidators and parties affiliated to liquidators. The Board will, and by reason of the fact that no judicial management process will achieve any results other than eventual liquidation, oppose any judicial management process.

A brief status report:

· Agreement with Sharemax shareholders

The board has been and is in discussion with relevant parties and agreements have been reached in some instances (see previous press releases). Following the agreements already concluded, the board is pleased to announce that it is on the verge of reaching an agreement with the shareholders of Sharemax Investments. More detail will be provided as soon as these agreements have been concluded.

· Property management

The Frontier board has decided to subcontract some of the property management of seven properties (Athlone; die Meent; Oxford Gate; Liberty; Range View; The Fern; Rivonia) to JHI Properties as from March 1, 2011.