16 July 2010
Pan-African cellular operator MTN has announced an empowerment deal that will see a 4% stake in the company, worth approximately R8.1-billion, being sold to black investors.
The transaction, called MTN Zakhele, will give MTN South Africa an additional effective black ownership of up to 29.1%, making it the largest empowerment deal in South Africa’s telecommunications sector to date.
“BEE is integral to the ethos of MTN, and MTN believes that broad-based BEE participation is important to its future success as a group,” said MTN president and CEO Phuthuma Nhleko in a statement this week.
“Since its incorporation in South Africa in 1994, MTN has been at the forefront of BEE in South Africa and remains fully committed to the principles of [empowerment] to provide long-term and sustainable benefits to its participants.”
The new empowerment offer is expected to open to the public on 30 August, and a prospectus with details of the offer is being distributed to MTN retail stores and Post Office outlets around the country.
The transaction is envisaged to run for a period lasting six years, the first three of which will be a lock-in period, after which participants will be free to trade with other BEE investors.
To participate in the MTN Zakhele empowerment scheme, qualifying investors will be invited to subscribe for ordinary shares at a price of R20 per share. The minimum subscription required for participation in the public offer is R2 000 – meaning a purchase of 100 ordinary shares.
“There will be no cap per individual investing in the MTN Zakhele empowerment scheme,” MTN said. “All valid share applications will be considered, and a bottom-up allocation process will be followed should the scheme be over-subscribed.”
Employee ownership scheme
In addition to the Zakhele scheme, MTN will issue approximately 0.1% of its issued share capital on a fully diluted basis to an employee share ownership plan.
Eligible employees will not be required to contribute equity in order to participate in the employee share ownership plan, in which MTN management and directors will have no participation.
MTN South Africa MD Karel Pienaar said the empowerment deal would enhance the company’s BEE credentials and supplement other areas of the BEE scorecard, such as preferential procurement, skills development, employment equity and enterprise development.
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