SAB Ltd Announces Detailed Terms Of BBBEE Transaction
8 December 2009
- Total value of transaction is R7.3 billion
- 8.45% of SAB Ltd equity to be held by broad base of black participants
- Participants will be SAB employees, qualifying black-owned retailers and the new SAB Foundation
- Three separate investment entities created to implement transaction
- Estimated 67,000 new shareholders targeted
The South African Breweries Ltd (SAB) today announced the full terms of its broad-based BBBEE transaction. The transaction, which was first announced on 1 July 2009, will place 8.45% of the company's shares under black ownership and has increased in value from the initial estimate of R6 billion to R7.3 billion.
The transaction size was increased largely in response to the recent rise of about 70% in SABMiller's USD share price, and the inclusion of a greater number of participants.
"We have adapted the originally envisaged transaction to ensure we remain true to our original goal of delivering a broad-based empowerment transaction which is both significant and distinctive," said SAB Managing Director Norman Adami. "What we have announced today is a truly innovative transaction which will have a positive impact on the lives of many thousands of South Africans."
The transaction is genuinely broad-based, and the participants will be SAB Ltd employees; qualifying black-owned beer and soft drink retailers, and a new SA Foundation.
Several factors make the transaction distinctive, including that:
- The benefits of the deal are targeted at major stakeholder groups who play a meaningful role in SAB's long term business success;
- No external bank funding is required;
- A meaningful bi-annual cash dividend will be paid from year one; and
- The transaction is affordable and easily accessible - employees and the SAB Foundation will make no upfront cash payments while qualifying retailers will make only a small cash investment.
Three separate investment entities have been created to implement the transaction:
- The SAB Zenzele Employee Trust will hold 18.5 million SAB Ltd shares for the benefit of employees, representing 40% of the SAB shares issued under the transaction. Participants will include all permanent black employees of SAB, its subsidiaries and of the SABMiller Group who are permanently resident in South Africa as well as white employees who do not normally participate in existing group share option plan.
- SAB Zenzele, a South African registered public company, will hold 19.2 million SAB Ltd shares for the benefit of retailers, which represents 42% of the SAB shares issued under the transaction. Black-owned licensed liquor retailers; black owned retailers who have lodged or materially completed a licence application; and black-owned registered customers of ABI, SAB Ltd's soft drinks division, will be eligible to participate.
- The newly created SAB Foundation will hold 8.4 million SAB Ltd shares, or 18% of the SAB shares issued under the transaction. It will apply the dividend income received from these shares for the benefit of the wider South African community.
The Chairman and Board of Trustees of the Foundation, which will focus on fostering entrepreneurship, have been appointed. Cyril Ramaphosa, well-known businessman, has been appointed as Chairman while the independent trustees are William Rowland, Honorary President of both the World Blind Union and of Disabled People of SA, and Polo Radebe, CEO of the Identity Development Fund. SAB trustees are Norman Adami, Vincent Maphai, Corporate Affairs and Transformation Director, and Hepsy Mkhungo, Head of Transformation, CSI and Enterprise Development.
Participants will, from inception, have voting and economic rights in SAB Ltd, and bi-annual cash dividends are expected to be paid to all participants from year one for the whole of the ten-year transaction period.
The transaction forms part of SAB's broader strategy, called the Five Thrusts Strategy. The fifth thrust of the strategy relates to SAB's determination to maintain and enhance the organisation's societal leadership.
"SAB recognizes that its role as one of SAB's leading companies carries an inherent obligation to demonstrate leadership in every dimension of the business, including the role we must play in supporting the progress of South African society," said Adami. "SAB Zenzele takes our long standing commitment to supporting black empowerment to a new level and provides a strong platform on which to empower and improve the social well-being of thousands of South Africans." Adami continued.
The transaction will target an estimated 67,000 new shareholders, of whom over 95% are estimated to be black individuals or black majority-owned enterprises. After the ten-year transaction period, SAB Ltd shares will be exchanged for SABMiller shares. The transaction will equate to an effective 14.1% BBBEE transaction in terms of the BBBEE Codes of Good Practice.
The offer is scheduled to open at the end of February 2010 and to conclude in May 2010.
For further information, please contact Robyn Chalmers on 082 924 2267 or Emma King on 072 010 7704.
SABMiller plc queries can be directed to Nigel Fairbrass on +44779 9894265.