Telecommunications giant Vodacom has initiated a R17.5-billion deal that will increase its effective black economic empowerment (BEE) ownership to about 20% and provide exposure to Vodacom's local and international operations.
The transaction will see existing BEE partners YeboYethu exchange their current shareholding in Vodacom South Africa for a shareholding of between 5.8% and 6.25% in Vodacom Group, giving the group an effective BEE shareholding of about 20%.
“Our intention was always to move our BEE investors from being shareholders in Vodacom South Africa to a shareholding at the group level, thereby giving them exposure to the broader local and international markets in which Vodacom Group trades,” Vodacom Group CEO Shameel Joosub said in a statement to shareholders on Monday.
Vodacom Group has agreed terms with Royal Bafokeng Holdings (RBH), Thebe Investment Corporation, YeboYethu and a newly formed staff scheme, the combined interests of which will be consolidated into a new ten-year YeboYethu BEE structure that will own the shares in Vodacom Group.
“It will replace and build on the R7.5-billion YeboYethu ownership scheme that was concluded in 2008 and is anticipated to unwind on October 8, 2018,” he explained.
The existing transaction, comprising a 6.25% shareholding in Vodacom South Africa held by YeboYethu, RBH and Thebe, has benefited more than 102 000 YeboYethu investors and 8 500 current and past Vodacom South Africa employees.
The unwinding of the existing ownership scheme is expected to unlock about R7.5-billion, or 6.7 times the value of the original capital the BEE partners invested into the 2008 transaction.
“Part of this value will be returned to our existing BEE shareholders in the form of an upfront special dividend of R3-billion,” Joosub commented.
YeboYethu will remain listed on the BEE segment of the JSE.
“We welcome the consultative process that Vodacom and its partners followed to structure the new YeboYethu transaction,” said YeboYethu chairperson Zarina Bassa.
“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.”
Vodacom’s new BEE transaction will be funded through a combination of third-party and vendor financing, reinvested equity of R4.5-billion from the existing BEE partners and facilitation from Vodacom Group.
This transaction remains subject to regulatory and shareholder approvals.