MTN second BEE deal, Zakhele Futhi raises R1.1 billion

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MTN’s, South Africa’s mobile phone giant, second black economic empowerment (BEE) deal, under which it will sell a 4% stake in the mobile phone company, worth about R9.9 billion, to black investors raises R1.1 billion. By Gugu Lourie

Disappointingly, this amount was less that the target equity to be raised of R2.5 billion.

But the cash raised exceeded the minimum amount of cash required for the second  MTN BEE transaction to proceed (being an amount of R250 million).

The telo said on Tuesday that MTN Zakhele Futhi Public Offer raised about R1.094 billion from more than 81 000 applicants from across South Africa.

The mobile phone company said in addition, applications were received from 11 203 qualifying MTN Zakhele shareholders holding 13, 5 million MTN Zakhele Shares to re-invest the MTN Zakhele scheme in respect of these MTN Zakhele Shares into MTN Zakhele Futhi Ordinary Shares, equating to approximately R817 million.

As a result, the total number of MTN Zakhele Futhi Ordinary Shares to be issued and allotted on 23 November 2016 is 123 million.

The new MTN BEE transaction, together with the continuing contribution of the MTN Zakhele empowerment transaction, translates to an effective indirect “see-through” black ownership in excess of 30% of MTN’s South African operations.

MTN will provide an effective transaction discount of 20%, through additional equity in the structure.

BEE is designed to widen ownership of the South African economy, which is still mainly in white hands 22 years after the end of apartheid.

As part of the new BEE deal, MTN will introduce a new employee share ownership plan (ESOP), excluding management and directors, requiring no equity contribution from eligible participants to augment MTN’s South African BEE initiatives. Accordingly, MTN will issue approximately 0.1% of its issued share capital to be held in a trust for the benefit of these employees.

MTN expects that the 2016 ESOP will be effective on or about 24 November 2016. Participation in the 2016 ESOP is being facilitated by MTN and/or the relevant employer companies within the MTN group).

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