In demonstrating its ongoing commitment to transformation and black economic empowerment (BEE) ownership in South Africa, machine industry company Bell Equipment’s Bell Equipment Company South Africa (Becsa) and Bell Equipment Sales South Africa (Bessa) subsidiaries have entered into transactions that will result in both being 51% black-owned.
To this end, the board of Bell Equipment approved the transaction, together with the restructure of Bell Equipment Group, to facilitate the BEE transaction, which will become effective from January 1, 2020.
The salient terms and conditions of the BEE transaction were concluded this week and will result in a new South African holding company – Bell Equipment South Africa Holdings (BHL) – being incorporated.
After the implementation of the transaction, the company will hold 70% of the issued shares of BHL, and through BHL and BHL’s shareholding in Becsa, hold an effective 49% shareholding in each of Becsa and Bessa.
A newly incorporated BEE management company (BEE Manco) will hold 30% of the issued shares of BHL, and through BHL’s shareholding in Becsa and Bessa, hold an effective 21% shareholding in each of these companies.
BEE Manco shareholders will be five BEE employees at management level of the Bell Equipment group, and comprise of Avishkar Goordeen, Duncan Mashika, Dominic Chinnappen, Niraj Andhee and Bruce Ndlela.
Another new South African intermediate holding company, Becsa Holdings, has also been incorporated. The percentage holding of the ordinary shares in this company will see BHL hold 70% of the shares and BEE Manco 15%, while the Foundation and Sibi will each hold 7.5%.
Sibi, the Foundation and BEE Manco will collectively hold 30% of the issued ordinary shares of Becsa Holdings. Additionally, BEE Manco will have an effective 21% shareholding in Becsa through its 30% shareholding in BHL.
Further, Becsa Holdings will acquire 100% of the Becsa share capital from the company for R360-million in consideration for which Becsa Holdings will pay R10-million in cash, and issue to the company one adjustable Becsa Holdings preference share for R350-million.
The scheduled redemption date of the preference share is December 31, 2029.
The purchase price of R51-million for the effective 51% black shareholding in Becsa, through Becsa Holdings and BHL, comprises BEE Manco through BHL (21%), BEE Manco directly (15%), Sibi (7.5%) and the Foundation (7.5%).
The purchase price of R900 000 for the effective 21% shareholding in Bessa, through BHL, comprises BEE Manco through BHL (21%).
In a statement on Wednesday, Bell Equipment confirmed that the subscriptions and acquisitions were funded by loans to the respective parties and, on a net basis, did not generate cash sales proceeds.