R23.2bn bonanza
MTN has unveiled plans for a new black economic empowerment deal after announcing the unwinding of its current empowerment vehicle.
The cellular operator, which boasts the largest network in Africa, will be issuing a R3.2-billion special dividend — — equal to about 1.8 percent of MTN’s share capital — as the first in dissolving its current black economic empowerment vehicle.
In 2002, Newshelf (Pty) Ltd was established and held by the Alpine Trust to acquire 18.7 percent of MTN’s ordinary shares over a six-year period.
The company said in a statement on Monday: “Subject to appropriate financial market conditions, MTN intends to make proposals to its shareholders to implement a new BEE transaction during the first half of 2009.
“The purpose of the Newshelf acquisition is to facilitate the orderly [unwinding] of the Newshelf structure and minimise the dilutionary impact of the BEE transaction on earnings going forward.”
During 2007, some of the shares were sold to the Public Investment Corporation, leaving Newshelf with a 13.1 percent (R23.4-billion) stake in MTN.
The unwinding will pay out to 3200 beneficiaries, meaning a significant reduction of the company’s black economic empowerment status.
These beneficiaries are a combination of historically disadvantaged MTN employees and eligible senior staff members, including chief executive Phutuma Nhleko and chief operating officer Sifiso Ndabengwa.
MTN said the R3.2-billion special dividend would be paid to beneficiaries early next year, with the remaining R20-billion to be paid at a future date.
Lindsey McDonald, ICT analyst at Frost & Sullivan, said the company wanted to keep a favourable BEE scorecard, adding: “This deal will make up for any loss in BEE rating.”
However, the company said it would only sell 5-6 percent of its issued share capital.
“This will amount to between 21 percent and 25 percent of its South African operations,” said Cadiz Asset Management analyst Rajay Ambekar. “This wouldn’t amount to the same score as what they currently have.”
But Ambekar added the company would make a public offer similar to Sasol’s Inzalo and Vodacom’s YeboYethu, where previously disadvantaged investors could buy shares at a discount.
Loading ...