JSE-listed Reunert has proposed a new transaction implementation agreement that would result in the restructure of its original black economic-empowerment (BEE) deal – extended and increased – and the introduction of an employee share ownership programme.

The proposed agreement, with Bargenel Investments, Rebatona Investment, Julopro and the Rebatona Educational Trust, aims to: continue to embrace broad-based inclusive growth and empowerment by providing qualifying Reunert employees with an opportunity to participate in the value of Reunert; continue, through its long-standing relationship with, and support of, the Rebatona Trust, to empower black female youth to obtain a meaningful education and subsequent employment and the relevant training and skills development to succeed in business; and strengthen Reunert’s competitive position in its respective product and services markets in South Africa.

The company’s 2007 BEE transaction resulted in about 9.5% of the-then-issued Reunert ordinary shares being indirectly held by the Bahedile Trust, the Cache Trust, the Neapaugra Trust and the Selemo Trust (collectively the Peotona Parties) and the Rebatona Trust.

The Peotona Parties, which will not participate in the proposed BEE transaction, and the Rebatona Trust, which will, prior to the implementation of the proposed BEE transaction, repurchase all of the Rebatona shares held by the Peotona Parties for R9.6-million, funded by Reunert, hold their interests in Reunert through Rebatona, which holds all of the ordinary shares in Bargenel, which in turn holds the Reunert shares.

At present, Bargenel’s holding of Reunert Shares amounts to about 10% of the current Reunert shares in issue.

“For a variety of reasons, including a lower-than-expected economic growth, the significant reduction by government in investment in electrical infrastructure over the past years and the material adverse impact of the Covid-19 pandemic on Reunert’s businesses, the envisaged value in relation to the original BEE transaction has not materialised,” Reunert said in an update to shareholders.

According to the company, it will procure the registration and establishment of a trust called the Reunert Employee Share Ownership Trust (Esop) to facilitate broad-based and meaningful participation in the economy by providing qualifying Reunert employees with the opportunity to effectively participate in the growth of Reunert.

Reunert, Bargenel, Rebatona, the Esop and the Rebatona Trust will enter into a relationship agreement that will regulate the relationship between Reunert and Rebatona as preference and ordinary shareholders of Bargenel; protect the BEE status of Rebatona and Bargenel; and preserve and safeguard the status of the Rebatona Trust as a broad-based black ownership scheme and the Esop as an employee share ownership programme in terms of the Codes of Good Practice on BEE.

The proposed BEE transaction remains subject to the fulfilment or, where applicable, waiver of several conditions.

Reunert will send out, in due course, a circular setting out the full terms and conditions of the proposed BEE transaction and include a notice convening a general meeting of shareholders for February 15, 2022.