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customs arrangements with other countries in which MCOM operates and we could see a spill-
over effect in our relations with those other trading partners or governments.

RECOMENDATION

Adopt OPTION 3, NEGOTIATE AND STAGGER PAYMENTS BUT LIST ON EXCHANGE. The
most critical objective at this time is to restore relations with the government. This requires a
'trust but verify' approach. Option 1 worsens the relationship. Option 2 does improve the

relationship but injecting cash from outside into Nakolia exposes MCOM group to political and
expropriation risk. Option 3 certainly takes the relationship much further and the staggering

allows us to proceed cautiously to rebuild the relationship whilst allowing us to match any debt
or cash raised to settle the fine against our assets in Nakolia, helping to mitigate expropriation
risk. Option 4 will damage close to 50% of our value and is simply suicidal!

ACTIONS

The Board should immediately terminate court proceedings and notify the Government of
Nakolia of our keenness to accept Option 3 with a proviso that the exchange listing free float
arrangement should not exceed 49%, the limit after which MCOM could lose control and

become vulnerable to takeover risk. Use MCOM's leverage as a major employer in that country
to encourage the government to accept a lower percentage as well as extending the timelines
for compliance from 12 to the 24 months available in Option 1. Whilst negotiating, leave Option

2 and Option 4 -the withdrawal option open so the government of Nakolia understands the
country is also at risk of losing jobs and scaring off future investors should we have to pull out.
Suitable Transaction Advisors should be sought in the event of the government agreeing and a

Management task team be appointed to prepare MCOM Nakolia for listing in 2017.

Appointment of New Group CEO

We have received a short list of 4 candidates for the Group CEO position. This is probably one

of the most critical decisions as it can determine the long term success of MCOM (lack of a
permanent Group CEO is noted as weakness in our SWOT analysis -Appendix 1). The first
issue to consider is whether we need a CEO from outside the MCOM group or internally, which

is also linked to the efficacy of our succession planning strategy. We have 4 very good
candidates, two from outside and the other two are internal candidates:

Developed by The CharterQuest Institute for 'The CFO Case Study Competition 2016'
www.charterquest.co.za | Email: thecfo@charterquest.co.za