Dear Ventracor Shareholder As you are aware, on Wednesday 19...

Dear Ventracor Shareholder

As you are aware, on Wednesday 19 March we obtained over 5% of shares on issue to support the requisition of an Extraordinary General Meeting of Shareholders to remove the current Board of directors and to replace these directors with a group of highly qualified people.

On Thursday morning 20 March the current Board appointed Ferrier Hodgson as Administrators. This appointment has rendered any plans to remove directors ineffective. Furthermore, we understand that the Administrators can now legally "deal with" or sell, the assets of the Company without shareholder approval.

We have now had an opportunity for our representative Michael Spooner to meet with the Administrators and to seek expressions of interest from third parties regarding a possible sale of equity in the company.

It would appear that:

1. The current Board, having obtained an expression of interest from one potential buyer, immediately proceeded to put the company into Administration wherein the Administrators could act without further input or approval from shareholders to "deal with" or sell the assets of Ventracor.

2. The Administrators are in discussion with a single third party (as determined by the existing Board) to sell the business. The terms of the sale agreement have been kept confidential by the Administrators however we think that it is somewhere between $5m and $10m most likely around $8m.

3. We are assured that the proposed sale terms will satisfy 100% of all outstanding liabilities including staff termination expenses which include Peter Crosby.

4. However the Administrators have also indicated that there will be little, if any, residual funds from the sale of the company for distribution to shareholders. .

Going forward, a number of shareholders have expressed interest in participating in a further capital raising to keep the company afloat. In this regard we have formally requested that the Administrators immediately prepare a Share Purchase Plan (SPP) which, if successful, could be undertaken quickly and may provide ongoing capital.

You should note however that, as we understand it, the Administrators are not under an obligation to shareholders and may, at their sole discretion, elect not to undertake an SPP. It is in this regard you should also note that there may be specific approval
required from ASIC to undertake an SPP. Such SPP would have to be subject to the replacement of the current Board and management.

SPP. Such SPP would have to be subject to the replacement of the current Board and management.

Administrators have indicated in their response that the company tried to raise finances from the shareholders in December 2008 by an SPP that failed, and as such they feel that there is no merit is pursuing the same path again.

It is important that Shareholders be fully informed. We are encouraging the Administrators to put out a statement to Shareholders as soon as is possible.

We will continue to engage the Administrators however it would appear there are extremely few options available. It seems likely, at this point, that our action has come too late to make a difference to the outcome.

For further information and updates on the status of Ventracor, please contact the administrators directly. Their email address is: [email protected].

Thank you once again for your support. It is very disappointing that we have not been able to achieve a better outcome.


Yours Faithfully



Vijay Kakani
Michael Fox