R2.1bn top-up deal takes PPC SA BEE shareholding to 30%
ENGINEERING NEWS / 15 MARCH 2018 - 16.00 / SCHALK BURGER
Cement producer PPC on Thursday announced details of its R2.1-billion top-up black economic empowerment (BEE) scheme that, together with the BEE shareholding from two previous transactions, will result in an effective 30% BEE shareholding at the PPC South Africa level.
The PPC Phakama transaction, which was proposed in December, will comprise the PPC South Africa Employee Trust, a community development trust and eligible black entrepreneurs.
PPC CEO Johan Claassen
“We are excited to announce the PPC Phakama transaction, which demonstrates our approach to long-term sustainablevalue creation. Our employees will hold approximately 10% direct shareholding in our South African businesses, allocated equally,” said PPC CEO Johan Claassen.
Further, communities, through a community development trust, will have an indirect equity shareholding of about 8% in PPC South Africa. The trust will consist of communities, which are still to be confirmed, residing in and around the areas in which PPC South Africa operates.
Eligible black entrepreneurs, which are also still to be finalised, will be allocated about 7% direct equity shareholding in PPC South Africa.
“It is my hope that PPC Phakama marks the opportunity to create value for employees and simultaneously grow and build PPC into a formidable company,” he added.
The PPC Phakama transaction is valued at R2.1-billion based on a derived intrinsic equity value of R10.2-billion for PPC South Africa, before adjustments for a non-controlling and unlisted interest.
“This transaction reflects our commitment to broad-based transformation in line with the country’s socioeconomic imperatives,” said PPC CFO Tryphosa Ramano.
During the period of the transaction the participants, with the exception of the community development trust, will enjoy a “trickle dividend” of 20%, to the extent that PPC South Africadeclares a dividend, which will be used to purchase PPCshares at the prevailing market price in the name of the individual participant.
The community development trust will receive a 20% “trickle dividend” in cash to be used for community development initiatives.
“This sustainable structure will afford PPC South Africastrong BEE credentials for the duration of the scheme, ensuring the company’s compliance with the Mineral and Petroleum Resources Development Act, 28 of 2002 and the Broad-Based Socio-Economic Empowerment Charter for the South African mining and minerals industry,” said Ramano.
The transaction will be facilitated through a notional vendor funding structure over a ten-year period for eligible employees, black entrepreneurs and a perpetual trust for communities.
“The success of the PPC Phakama transaction and the size of the benefit to participants will be determined by PPC’s performance and the dividends over the ten-year period. The dividends are driven by the company’s profitability to which employees make an invaluable contribution,” concluded Claassen.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER