Vodacom, South Africa’s biggest mobile phone operator, announced on Monday that it is to unlock value for shareholders of its empowerment scheme, YeboYethu.
Vodacom established YeboYethu in 2008. YeboYethu issued 14.4 million YeboYethu ordinary shares at R25 each and, as a result of the public offer, more than 102 000 qualifying black investors bought a stake in Vodacom SA.
At the time, it was one of the largest empowerment schemes in the telecommunications industry.
In August 2016, YeboYethu listed its ordinary shares on the JSE’s Empowerment Segment.
The Vodafone-owned company announced on Monday a new black economic empowerment (BEE) transaction valued at R17.5 billion.
The new BEE transaction will see the Vodacom SA BEE shareholders settle their outstanding vendor funding.
YeboYethu’s existing BEE partners, Royal Bafokeng Holdings (RBH) and Thebe Investment Corporation (Thebe), will then exchange their shareholding in Vodacom SA shareholding for shares in YeboYethu.
The mobile phone company said YeboYethu will declare a R3 billion special dividend, or circa R67 per YeboYethu share, to its shareholders.
A new staff scheme, funded by a R1.05 billion contribution from Vodacom Group, will acquire YeboYethu shares from the existing Vodacom SA ESOP and subscribe for additional YeboYethu shares.
YeboYethu will then exchange its shareholding in Vodacom SA for shares in Vodacom Group.
YeboYethu will issue R5.8 billion preference shares to third party banks and R4.7 billion preference shares to Vodacom Group and use the proceeds to subscribe for new shares in Vodacom Group.
The R10.5 billion of preference shares funding that YeboYethu raises carries a very attractive pricing – approximately 69% of prime.
Following the transaction, Vodacom Group’s BEE shareholding will be consolidated in a reconstituted YeboYethu structure, which will remain listed on the BEE segment of the JSE.
The transaction will be priced using the 60-day VWAP of a Vodacom Group share on the pricing date. For illustrative purposes, this is assumed to be R152.50. It is expected that the final pricing of the transaction will be confirmed in early July 2018 and the transaction implemented in September 2018.
“These are exciting times for YeboYethu shareholders as we continue to invest in the next 10 years, building on what we have already achieved over the last 10 years with an increased involvement as Vodacom Group’s BEE partner, in the largest BEE transaction in the ICT sector,” says Zarina Bassa, chairperson of the YeboYethu board of directors.
“The board is unanimously supportive of the transaction as it creates immediate value now for the more than 82 800 black investors through the cash dividend and, importantly, an opportunity to reinvest on favourable terms in the Vodacom Group.”