http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.04Change: 0.08
R/$ = 11.04Change: -0.01
Au 1247.89 $/ozChange: -4.13
Pt 1281.00 $/ozChange: -3.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Sep 02, 2011

BBBEE deal benefits employees and communities

Back
Sappi Southern Africa financial director Colin Mowatt discusses the BBBEE deal between Sappi and Lereko Property Consortium.
Africa|AMB Capital|Had Sappi South Africa|Lereko Investments|Lereko Property Consortium|Merchant Bank|PROJECT|Projects|Sappi|Sappi Foundation Trust|Sappi Limited|Sappi South Africa|Sappi Southern Africa|Africa|Building|Paper Manufacturer|Services|Colin Mowatt
Africa|PROJECT|Projects|Sappi||Africa|Building|Services|
africa-company|amb-capital|had-sappi-south-africa|lereko-investments|lereko-property-consortium|merchant-bank-company|project|projects|sappi|sappi-foundation-trust|sappi-limited|sappi-south-africa|sappi-southern-africa|africa|building|paper-manufacturer|services|colin-mowatt
© Reuse this



Employees of South African paper manufacturer Sappi are set to benefit substantially from a broad-based black economic- empowerment (BBBEE) transaction between Sappi and black-owned investment company Lereko Property Consortium. The transaction cost R814-million and was facilitated by Rand Merchant Bank.

Sappi has enhanced its commitment to BBBEE transformation through this deal by recognising the role that employees play in the success of the company; attracting and retaining staff, especially skilled black employees; building on Sappi’s commitment to communities; as well as moving from Level 6 black economic-empowerment (BEE) contributor status to Level 3 contributor status.

The BBBEE deal benefits all Sappi’s South African employ- ees, apart from white managers who already participate in an existing Sappi share incentive scheme. The employee share ownership plan owns some 62.5% of the deal, constituting the majority percentage of the shares. The management share ownership plan was awarded 15% of the deal. “This will help retain skilled black managers at Sappi,” says Sappi Southern Africa financial director Colin Mowatt.

The Lereko Property Con-sortium, headed by Lereko Investments and including other beneficiaries such as the Malibongwe Women Develop-ment Trust and financial services company AMB Capital, received 12.5% of the deal. The Sappi Foundation Trust received 10%. The beneficiaries of this trust include the local communities and the grower organisations situated around Sappi’s mills and plantations.

Through this new transaction, Sappi South Africa has maintained its initiative to expand from a Level 6 BEE contributor to a Level 3 contributor. “Had Sappi South Africa been scored in terms of the generic Department of Trade and Industry (DTI) scorecard, we would only have achieved Level 4 status,” explains Mowatt. This is due to the bonus points that the Forestry Charter scorecard awards for increased socio-economic development spend, which are not provided for in the generic DTI scorecard.

Meanwhile, he mentions that Sappi is involved in various community projects, such as the ongoing Project Grow programme, which assists community members in rural areas with aspects of the forestry business, such as financial aid and technical assistance. “The aim of this community project is to provide the necessary assistance to emerging timber farmers, which enables Sappi to create a mutually beneficial relationship with the community residents,” he explains.

Sappi provides various financial assistance programmes, which enables farmers to plant and main- tain new trees. Besides financial assistance, farmers also receive site-suitable free seedlings as well as free technical assistance. “Sappi and the communities are, thus, mutual beneficiaries. Sappi has already bought trees from emerging farmers and new trees have been planted. This money then benefits the surrounding communities through initiatives such as building new schools,” says Mowatt.

Sappi also plays an important role in health-related projects. “Sappi’s HIV/Aids awareness programme offers support to child-headed homes, as well as developing centres where children can receive proper care while their parents are at work,” he explains.

But, besides the various community initiatives that have been established, the BEE transaction creates the additional benefit of employees becoming shareholders. Mowatt says that being given the opportunity to own shares in Sappi is like a long-term savings plan, as the shares in the company are expected to grow in value over time. Thus, it is clear that the intention of the BEE transaction is to lock employees in to prevent shareholders selling their shares too soon, which is not the true objective of BEE. The deal has been structured in such a way that previously participating employees will only be able to sell their shares in 2019. “The benefits of the deal are long term, where employees are given shares, which will provide them with the opportunity to sell them when they have grown in value and are worth more,” explains Mowatt.

Sappi South Africa has played a prominent role in the development of BEE in the past. In 2006, the pulp and paper manufacturer signed a BBBEE land deal, where it sold a 25% undivided share in its plantation land to the Lereko Consortium.

In 2008, the Sappi Limited board and the transformation committee reviewed the 2006 transaction, which led to the decision to restructure the deal in accordance with the BBBEE requirements of the gazetted Forestry Charter of May 2009. “Looking at the requirements of both the DTI’s generic scorecard and the Forestry Charter, it became clear that Sappi needed to do an equity-based empower- ment transaction rather than a property-based transaction,” says Mowatt. With this transaction, Sappi identified that its employees needed to have shares. “Instead of owning 25% of the land, employees will own Sappi shares,” concludes Mowatt.

Edited by: Shannon de Ryhove
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Black Economic Empowerment News
US car giant General Motors (GM) has agreed to pay a symbolic sum of up to $1.5-millio to victims of South Africa's apartheid-era government, who are suing it and another four companies for helping prop up the white-minority state. South Africa's Khulumani Support...
Black economic-empowerment (BEE) in South Africa provides a significant contribution to the development of the country, says BEE consultancy EconoBEE CEO Keith Levenstein. However, he notes that irregularities such as tender fraud and corruption create severe...
Professional services company KPMG has warned South African businesses that the current employment
More
 
 
Latest News
The Cape Town International Convention Centre (CTICC) has outperformed its targets over the past financial year and contributed R3.1-billion to the gross domestic product in the 2013/14 financial year. CTICC CEO Julie-May Ellingson said the convention centre had been...
Public Enterprises Minister Lynne Brown
Public Enterprises Minister Lynne Brown has released details of the remuneration of the chairpersons and nonexecutive directors of the various State-owned company boards falling under her Ministry. The remuneration figures, which are attached, are based on figures...
Installed wind power capacity could swell by 530% to 2,000 gigawatts (GW) by 2030, supplying up to 19% of global electricity, a report from a trade association and Greenpeace said on Tuesday. It said installed wind energy capacity totalled 318 GW at the end of last...
More
 
 
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
 
 
 
 
 
This Week's Magazine
The broad-based black economic-empowerment (BBBEE) alignment process in the con-struction sector has begun, dur-ing which the sector codes of the Construction Sector Charter Council (CSCC) will be aligned with the revised Codes of Good Practice (CoGP), which come...
It is second time lucky for Toby Venter. Ten years ago he negotiated to buy the Kyalami racetrack, but “the deal did not materialise”.
Environmental solutions company I-Cat started construction work on its R22-million, 1 949 m2 environmentally sustainable office and warehouse facility, commissioned by I-CAT Environmental Solutions, at a launch event in October. The new sustainable I-CAT campus,...
IAN EVANS AirWatch file synchronisation and sharing system was initially designed for a large airline company
Effective file synchronisation and sharing across an organisation’s structures can provide the basis for robust mobile-device and document management while maintaining proper backup, version control and content distribution. These are the lessons learned by complex...
Hotel group Carlson Rezidor currently holds the largest hotel pipeline in Africa with 30 hotels and 6 300 rooms under development. The hotel group develops and operates Radisson Blu in the upper upscale segment and Park Inn by Radisson in the mid-market segment. With...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks