Aug 15, 2008
Logistics company announces BEE dealBack
Barloworld|Barloworld South Africa|Education|South Africa|Clive Thomson|Dumisa Ntsebeza
© Reuse this
In June, the company announced that a 10% stake in the company would be sold to black participants, including strategic black partners (SBPs), employees, an educational trust and a community group.
A total of seven SBPs would hold R1,384-billion, or 5,88 %, of the issued ordinary share capital of Barloworld, while employees and black nonexecutive directors, would hold in aggregate 2,39%, or R562-million, of its shares.
An educational trust would hold 0,78%, or a R184-million stake, and community service groups (CSGs) would own 0,95%, or R224-million worth of Barloworld shares.
Speaking at the public presentation of the new BEE transaction, Barloworld chair- person Dumisa Ntsebeza said that Barloworld South Africa would be improved as a result of the transaction.
Barloworld CEO Clive Thomson indicated that empowerment and transformation were one of the group’s five key focus areas.
In a note to shareholders, the company stated that the effective black ownership of Barloworld’s South African operations, after excluding mandated investments and offshore assets, was about 29%.
Upon first inspection, analysts at the presentation regarded the BEE deal as a “very well constructed transaction”.
The funding structure and Barloworld facilitation of the deal would include a R1,504-billion term loan funding structure, by which Barloworld provided SBPs and CSGs with the ability to raise funding at a competitive credit margin.
In the case of the SBPs and black non- executive directors, all dividends paid within the first seven years would go towards loan repayments.
The education trust would receive a dividend, which partially went towards loan repayment.
“I think we are in good hands, and I have every confidence that over the next seven years Barloworld’s performance will be fantastic, and if Barloworld’s performance is fantastic, then the share price will rise, and dividend flows will be good, and the trans- action will be sustainable,” said Thomson.
A number of parties expressed interest in participating in the deal, but Barloworld stated that it had a rigorous selection process based on the Department of Trade and Industry codes.
The ability to add value to Barloworld, BEE credentials, a broad-based black share-holding level, a women shareholding level, and access to equity funding were characteristics under scrutiny.
The company stated that it had developed a strategy to support the principles of broad-based black economic-empowerment (BBBEE).
The aim of this strategy is to ensure a meaningful number of black directors and executives in Barloworld and its subsidiaries.
This includes a staff complement that reflects South Africa’s diverse demographic profile, as well as procurement policies that recognise BBBEE, and social development programmes that were primarily directed at developing and empowering previously disadvantaged communities.
Edited by: Laura Tyrer© Reuse this Comment Guidelines
Other Materials-Handling News
Recent Research Reports
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 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...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
This Week's Magazine
A structured approach, wherein managers personally engage at each level of the project, is necessary to mitigate delays to the workflow on mega construction projects, says State-owned Eskom Kusile power station projects GM Abram Masango. The 4 800 MW Kusile power...
Construction of transmission lines to evacuate power from a regional hydroelectric project in East Africa, which was hanging on the balance following the withdrawal of financing by key partners, is now back on track. After six months of uncertainty, the African...
Three Memorandums of Understanding (MoUs) were signed between South African and Malaysian companies at the Malaysian High Commission in Pretoria on Friday. These MoUs are part of the indirect offsets programme South Africa is providing in return for Malaysia’s...
The South African new vehicle market may well dip to 640 000 units in 2014, says Toyota South Africa Motors (TSAM) sales and marketing senior VP Calvyn Hamman. This is the first prediction that anticipates a drop in the market. To date economists and industry bodies...
Nissan will re-enter the South African minibus taxi industry in March, when the new NV350 Impendulo goes on sale. The 16-seater has been specifically tailored to meet the terms of government’s Taxi Recapitalisation Programme, which aims to replace South Africa’s...