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Ntando Thukwana | 7 August 2023

Employee share ownership trust now owns a tenth of the company.

SE-listed cement group PPC has established a new employee trust that has purchased 10% of the company’s share capital and will benefit the group’s subsidiaries operating in South Africa.

PPC, with a market cap of around R4.1 billion, said on Monday the newly set up PPC Employee Share Ownership Trust which benefits more than 1 500 employees, will be funded by way of a PPC loan to the tune of R380 million.

The group confirmed that it is also spending an additional R975 000 to cover security transfer costs as part of the transaction.

While the trust’s objectives are to reward PPC employees for the duration of their employment and replace the company’s previous unwound equity ownership schemes, the programme will be weighted in favour of historically disadvantaged individuals in line with Broad-based Black Economic Empowerment (B-BBEE) policies.

The transaction effectively notches up PPC’s B-BBEE status, improving the company’s rating to level 1.

Speaking on the deal, PPC group CEO Roland van Wijnen said the transaction provides a meaningful way of rewarding its employees in South Africa who do not participate in PPC’s long-term incentive plan.

“PPC has been built upon the shoulders of its employees… We are pleased that the terms of the transaction are such that it stands to benefit employees for many years to come,” he added.

As part of the terms of the transaction, the loan will be repaid from future PPC dividends to the employee trust with 75% distributed to the company.

The remaining 25% of dividend payouts will be distributed to all qualifying beneficiaries of the trust.

“For the foreseeable future, until the loan, including capitalised interest, has been fully repaid, qualifying employees will effectively receive 2.5% of any dividends declared by PPC SA Holdings. Following the repayment of the loan in full, qualifying employees will receive 10% of the dividends declared by PPC SA Holdings,” the group noted.

PPC said the transaction, which is not subject to any conditions, closed on 4 August.

It added that the gross debt of the consolidated South African operations will not be affected by the transaction.

‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.


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