Mobile network MTN is set to unveil a R9.9bn black economic empowerment transaction dubbed MTN Zakhele Futhi.
The transaction is expected to kick into gear when its current empowerment vehicle, MTN Zakhele, unwinds on November 24 2016.
MTN said its Zakhele Futhi vehicle is set to last over an eight-year period. The MTN Zakhele Futhi offer is also expected to be opened up on September 12 2016, and will close on October 21 2016.
“MTN Zakhele has created exceptional value for its 124 00 black investors, notwithstanding an extremely difficult nine months, increasing nearly fourfold from R20 per share at inception in 2010, to about R77 per share when the share price closed last Wednesday, 17 August 2016. That equates to a total return of about 400% and a compounded annual growth of about 26%,” said MTN in a statement on Monday.
“The mandatory unwinding of MTN Zakhele on 24 November 2016, combined with the creation of the new MTN Zakhele Futhi scheme, will see MTN not only maintain its BEE targets as set out in the Information and Communication Technology Sector Code (the ICT Charter) but also adhere to the B-BBEE Act, allowing MTN to further embed empowerment and transformation in the DNA of its business,” said the company.
The mobile network said the proposed MTN Zakhele Futhi scheme is set to take the form of a public offering where qualifying black participants will be invited to subscribe for and beneficially own ordinary shares in MTN Zakhele Futhi with a minimum investment amount of R2 000.
These shareholders will further be given the opportunity to re-invest a portion of their MTN Zakhele shares in MTN Zakhele Futhi.
“MTN Zakhele Futhi is a special purpose vehicle, which will hold approximately 4% equity in MTN Group,” said MTN.
In addition, these MTN shares are planned to be issued at R102.80 each, which is a 20% discount to the 10 day volume weighted average price per MTN share on August 17 2016 of R128.50.
”This new transaction, together with the continuing contribution of the MTN Zakhele transaction, will translate to an effective indirect ‘see-through’ black ownership in excess of 30% of MTN’s South African operations,” said MTN Group Executive Chairman Phuthuma Nhleko.
MTN said its board of directors has also proposed the introduction of a new employee share ownership plan (ESOP) for MTN staff, excluding directors and management.
“The new ESOP scheme will not require equity from eligible participants. Accordingly, MTN will issue approximately 0.1% of its issued share capital to be held in a trust for the benefit of these employees,” said the company.