MTN intends to implement a R9.9-billion BEE transaction called MTN Zakhele Futhi.
Zakhele Futhi is a special purpose vehicle which will hold approximately 4% equity in the MTN Group.
The new share scheme will give qualifying black participants a discounted way to own MTN shares.
The MTN shares, to be issued to Zakhele Futhi, will be priced at R102.80, a 20% discount to the 10-day volume weighted average price of an MTN share on 17 August 2016 – R128.50.
Zakhele Futhi arrives before MTN’s existing special purpose empowerment vehicle, MTN Zakhele, contractually unwinds on 24 November 2016.
Current Zakhele shareholders have the option to convert their current shares into Zakhele Futhi shares.
How MTN Zakhele Futhi will work
- The Zakhele Futhi scheme will take the form of a public offering.
- African, Coloured, and Indian South Africa citizens by birth or descent will be invited to subscribe for and own shares in Zakhele Futhi.
- There will be a verification process to ensure interested parties are qualifying black participants.
- Minimum investment amount of R2,000 required.
- New investors locked in for three years before they can trade the shares.
- After three years, investors will be able to sell to qualifying black participants.
- After eight years, shareholders will be able to sell the shares to anyone.
- Zakhele shareholders can re-invest a portion of their shares in Zakhele Futhi.
- Zakhele shareholders will get a 20% discount on MTN shares through Zakhele Futhi.
- Zakhele shareholders will have the option to take cash, or roll their shares into MTN Group shares.
- Zakhele shareholders will have to make the choice on what they want to do by 21 October.
- If Zakhele Futhi shares are over-subscribed, MTN Zakhele shareholders will be prioritised.
- The Zakhele Futhi offer is expected to launch on 12 September 2016, and will close on 21 October 2016.
MTN Zakhele chairwoman Sindi Mabaso-Koyana said they have more than 100,000 Zakhele shareholders, who are mostly individual shareholders with less than 500 shares.
Mabaso-Koyana predicts that many of these shareholders will be keen to lay their hands on cash, and won’t convert their shares into the Zakhele Futhi offer.
Who qualifies for the Zakhele Futhi shares
- Black (African, Coloured, and Indian) South Africa citizens by birth or descent or who are citizens through naturalisation before 27 April 1994 or after that date, but who would have qualified for naturalisation before that date.
- Black groups: Black Companies and Black Entities (Black people own at least 51% of the equity, exercise at least 51% of the voting rights, and participate in at least 51% of the economic interests therein).
The verification process for Zakhele Futhi shares
- Applicants will be required to be verified for FICA purposes by a participating Nedbank branch.
- Zakhele Futhi is entitled to verify details and applicants are obligated to assist in such verification when requested.
- BEE, FICA, and supporting documents must be presented.