http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.89Change: -0.03
R/$ = 12.81Change: -0.15
Au 1085.78 $/ozChange: -6.74
Pt 950.50 $/ozChange: -8.00
 
 
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 Letters 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|Building|Charter|Health|PROJECT|Projects|Sappi|Africa|Services
Africa|Building|Charter|Health|PROJECT|Projects|Sappi|Africa|Services
africa-company|building|charter|health|project|projects|sappi|africa|services
© 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
Creamer Media Senior Deputy Editor Polity & Multimedia
© 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
Updated 21 minutes ago The South African Chamber of Commerce and Industry (Sacci) Business Confidence Index (BCI) rose by 3.3 index points to 87.9 in July. This followed a 2.3 index point drop in June and placed the BCI at a similar level to what it was in July 2014.
Updated 1 hour 41 minutes ago Forget Milwaukee and Brooklyn – Lagos and Dar es Salaam are the new brewery hot spots, according to U.S. mutual fund managers as they tap Africa's emerging beer companies in pursuit of long-term returns on investment. U.S. fund managers who originally entered the...
Updated 1 hour 51 minutes ago South Africa's rand touched a fresh 14-year low against the dollar on Wednesday amid concerns about the ailing local economy and after a US Federal Reserve official backed a US rate hike next month. Investors are worried that growth in Africa's most advanced economy...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
Daimler truck test engineer Dirk Stranz pushes one button, and then retracts his hands from the steering wheel of the Mercedes-Benz Future Truck 2025. “And now the truck is driving itself.”
The statutory body responsible for skills development and support in the banking sector, BANKSETA, was investing R68-million in the capacity building project of the University of Venda (UniVen), announced Bankseta company secretary Caroline King at a media event in...
LIONEL MOYAL Cloud services providers must compete against other cloud services providers for business by providing up-to-date systems and services
Legacy information technology (IT) systems are becoming increasingly obsolete because of the maturity, efficiencies and cost effectiveness of cloud-based IT services, says information and communication technology major T-Systems subsidiary Intervate head Lionel...
ARMANDÉ KRUGER Balancing the collection and processing of data must be aligned to strategy
Many complementary services enable companies to derive broad value from data inside and outside them. The complexity of data management means that companies’ strategies determine the various data systems and functions they will use, says PBT Group regional sales...
The South African Civil Aviation Authority (SACAA) has announced that it had awarded the country’s first remotely piloted aircraft systems (RPAS) pilot’s licence. It was issued on Friday, July 10, to SACAA employee and qualified commercial pilot Nicole Swart,...
 
 
 
 
 
 
 
 
 
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
Subscribe Now for $96 Close
Subscribe Now for $96