www.marketwatch.com Jul 19, 2013
Mongolia Growth Group Ltd. (“MGG” or the “Company”) announces that after a thorough review, Mandal General Daatgal LLC (“Mandal”), MGG’s Mongolian insurance subsidiary, has been determined to be a non-core business in respect of the future strategic direction of the Company. The board of directors of MGG has authorized management of the Company to seek value creating alternatives to the ongoing ownership of Mandal.
Management of MGG believes that a disposition of Mandal will allow MGG to focus its energy, corporate resources and capital on its core real estate leasing business with the goal of creating the most successful institutional property company in the rapidly growing economy of Mongolia.
While divesting Mandal will prevent the Company from participating in the future growth of the Mongolian insurance market, the benefits of a divestiture are expected to include the following:
* The release of capital to re-invest in the property business;
* Annual cost savings in the form of reduced audit, compliance and other expenses;
* Savings from the elimination of recurring marketing losses of Mandal;
* More predictable revenues by redirecting MGG exclusively to the property sector; and
* De-risking the business from the prospective of potential lenders to property assets.
“This was a very difficult decision,” said Harris Kupperman, Chairman and CEO of MGG. “We are very proud of the success that Mandal has achieved. Unfortunately, an insurance business does not fit into the overall framework of our much larger property company. In addition, we expect that reductions in corporate expense from a divestiture of Mandal would help move MGG towards our long-term goal of being cash-flow positive on a recurring basis.”
“Mandal no longer fits into the MGG portfolio” said Ganzorig Ulziibayar, President of Mandal. “MGG has been very supportive of us from the beginning. They have helped Mandal become one of the best insurance companies in Mongolia, and we are excited about our future as a standalone enterprise.”