Diversified industrial and logistics company Barloworld has announced the details of its black economic- empowerment (BEE) deal, which is valued at R2,4-billion.
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.