ArcelorMittal SA unveils R9bn BEE deal

12 August 2010

Steelmaker ArcelorMittal South Africa has announced a black economic empowerment deal worth over R9-billion that will see a 26% stake in the company being sold to the Ayigobi Consortium and a share trust that represents 8 500 of the company’s employees.

In a statement this week, ArcelorMittal says the transaction fulfils key objectives, including moving toward compliance with legislated empowerment equity ownership requirements and positioning the company for future opportunities to achieve improved self sufficiency and growth.

“Introducing broad-based BEE shareholders to our operations has been a priority for ArcelorMittal South Africa for some time,” said ArcelorMittal South Africa CEO Nonkululeko Nyembezi-Heita.

She said the company started looking at the possibility of an empowerment transaction in 2008, but that the global economic downturn made it impossible to implement a suitable transaction structure at the time. The company resumed its empowerment plans once some normality had returned to the markets.

“This is a long term strategic partnership. The Ayigobi Consortium will remain a shareholder for up to 14 years, while the [employee share ownership plan] participants will benefit over a five year period,” she said.

Industrial giant, catalyst for growth

ArcelorMittal South Africa’s new strategic equity partners will be the Ayigobi Consortium, led by Sandile Zungu. Other participants include Mabelindile Luhlabo, Mojalefa Mbete, Pragat Investments, Prudence Mtshali, Phemelo Sehunelo, Zebo Tshetlho, Zico, Oakbay Investments and Mabengela.

The remaining 25% of the Ayigobi Consortium will be allocated to women, youth groups and new entrants to the BEE landscape whose composition is still being finalised.

“The Ayigobi Consortium is pleased to be given the opportunity to partner ArcelorMittal South Africa. ArcelorMittal South Africa is an industrial giant that remains a catalyst to the realisation of South Africa’s inclusive economic growth and development potential,” said Zungu.

“We have the requisite skills, business acumen, commercial experience and strategic networks to assist in making ArcelorMittal South Africa one of the most admired industrial leaders in South Africa and beyond.”

New subsidiary created

To effect the transaction, ArcelorMittal South Africa will transfer all its assets to a new wholly owned subsidiary, ArcelorMittal South Africa Operations (OPCO), in return for 74% of OPCO. The remaining 26% shareholding in OPCO will be 21% held by the Ayigobi Consortium and 5% by the employee share ownership plan.

ArcelorMittal South Africa and OPCO will have identical boards of directors, and the Ayigobi Consortium will have the right to appoint one director to the board.

“I look forward to welcoming our new partners, including more than 8 500 staff, to our business as shareholders and trust that, together, we will have a mutually beneficial relationship,” said Nyembezi-Heita.

ArcelorMittal South Africa, formerly known as the Iron and Steel Corporation (Iscor), is majority owned by the world’s largest steelmaker, Luxembourg-based ArcelorMittal.

SAinfo reporter

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