25 March 2010
Global pulp and paper group Sappi has announced a black economic empowerment (BEE) deal that will see approximately 4.5% of the company, worth about R814-million, being transferred to employees, black managers, a community foundation and strategic partner companies.
The deal translates into the empowerment of approximately 30% of the company’s South African business.
“Sappi views broad-based black economic empowerment as a key requirement for sustainable growth and social development in South Africa,” Sappi Limited CEO Ralph Boettger said in a statement on Wednesday.
“The transaction recognises the crucial role that our staff play in making the company a success and builds on the strong relationship we have developed with Lereko.”
New manager, employee trusts
The first part of the deal consists of the creation of about 20-million of a new class of equity shares, which will be vendor financed and unlisted on the JSE, which will be allocated to three new trusts that have been created through the deal.
These includes an employee share ownership trust, which is for all Sappi full-time employees in South Africa who do not currently participate in a Sappi share scheme (holding 2.81% of issued shares); a management share ownership trust for all African, Coloured and Indian managers (0.67%); and the Sappi Foundation, which will focus on projects benefiting the communities around Sappi’s mills and plantations (0.45%).
“The transaction empowers our South African employees; will help attract and retain staff and in particular highly skilled black managers; and reinforces Sappi’s position as a responsible corporate citizen within the communities where we operate,” said Sappi Southern Africa CEO Jan Labuschagne.
“Furthermore, the transaction accommodates the key principles of [empowerment] and maximises the ownership component in terms of the Forest Sector Charter with Sappi moving from a Level Six Contributor to a Level Four Contributor on the Charter scorecard.”
Strategic BEE partners
The second part of the deal entails the issue of approximately 4.3-million ordinary, listed shares to the participants of the group’s 2006 plantation BEE deal, namely Lereko Investments (who will now hold 0.37% of issued shares), Malibongwe Women Development Trust (0.08%), and AMB Capital (0.12%).
This transaction also includes qualifying Sappi employees represented by an employee share ownership plan, and follows the unwinding of the rights of all parties from the 2006 deal.
“Our relationship with Sappi has been substantive and has created significant opportunities for the consortium,” Lereko Investments executive director Lulu Gwagwa said. “While this work will continue, we are excited by the opportunity presented to us to become Sappi’s strategic partner at the holding company level.
“We believe this investment will show significant upside for the consortium over the coming years. We are also confident that we will be able to assist Sappi in its other empowerment and transformation activities.”
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