28 July 2011
South African chemicals, explosives and property group AECI has unveiled a R1.2-billion black economic empowerment (BEE) deal that will see a 11.5% stake in the company being held by an employee share trust and a community share trust.
It has also announced the restructuring of an existing BEE deal between AECI subsidiary AEL Mining Services and newly merged empowerment company Kagiso Tiso Holdings.
Employee, community BEE transaction
AECI’s permanent employees in South Africa – of whom approximately 72% are black and 12% are black women – and black managers who are not already part of any of the group’s existing long-term incentive schemes will participate in the deal through an employee share trust, which will hold a direct stake of 8% in the company.
The AECI Community Development and Education Trust, which will fund educational and development initiatives benefiting black South Africans, will hold a direct interest of 3.5% of AECI’s issued share capital.
The transaction will have a maximum term of 10 years, will not require any funding from AECI or any external parties, and participants will receive a dividend from the first year.
The participants will be entitled to acquire ordinary AECI shares at the end of the transaction term.
“The [transaction] will advance AECI’s empowerment objective of increasing black participation in the hroup by providing long-term economic benefits of its success to a broad spread of black South Africans,” the company said in a statement this week.
Deal with Kagiso Tiso Holdings
In 2004, AECI concluded the sale of an effective 25.1% interest in AEL Mining Services to an empowerment consortium led by the Tiso Group, which has since merged with Kagiso Trust Investments to form Kagiso Tiso Holdings (KTH).
The KTH Consortium holds its 25.1% interest in AEL through a special-purpose vehicle which is 75% owned by KTH and 25% owned by the AEL Community Development Trust.
AECI has reached an agreement with KTH that will see the KTH Consortium swap the 25.1% holding in AEL Mining Services, in return for 4.18% of the issued ordinary share capital of AECI itself.
The transaction will see the AEL Community Development Trust retained as a shareholder in AECI.
“The KTH Transaction will allow AECI to control 100% of AEL and will provide AECI with greater flexibility in managing the operations of AEL, a leading developer, producer and supplier of commercial explosives, initiating systems and blasting services for mining and infrastructure markets in Africa and selected international markets,” the company said.
According to the statement, the two transactions will contribute to AECI achieving an effective 27.4% BEE equity ownership in terms of the Department of Trade and Industry’s Broad-Based Black Economic Empowerment Codes of Good Practice.
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