ArcelorMittal South Africa (AMSA, ACL), the South African arm of the world's largest steel producer, on Tuesday unveiled a 9.1 billion rand black economic empowerment deal that will see it transfer 26% of its shares to black investors and staff.
The BEE transaction has been structured so that all the assets of AMSA will be transferred into a new company where the issued share capital of that company will be 21% held by a special purpose vehicle controlled by the Ayigobi Consortium led by Sandile Zungu and 5% will be held by an employee share ownership scheme that will benefit about 8,500 AMSA staff members.
Shareholding of the Ayigobi Consortium is in turn held 75% by strategic partners including several of Imperial Crown Trading's (ICT) shareholders, as well as Mabengela Investments, which is led by President Jacob Zuma's son Duduzane Zuma. AMSA in a separate announcement on Tuesday said it planned to acquire ICT for 800 million rand in cash. ICT's only asset is a 21.4% prospecting right in Kumba Iron Ore's (KIO) Sishen mine.
Speaking during a conference called to explain the transaction, AMSA CEO Nonkululeko Nyembezi-Heita said the transaction fulfilled one of the key BEE objectives of AMSA, makes AMSA compliant with legislated empowerment equity ownership requirements and positions the company for various future opportunities.
The transaction, which is being funded through a notional funding formula, requires no equity contribution or third party funding and has an upfront loan available at facilitated rate to allow BEE partners early monetisation for a portion of the gain. The consortium has been tied into the deal for up to 14 years.
AMSA shareholders are expected to vote on the transaction late September and Nyembezi-Heita sees February 2011 as the date for the BEE transaction's conclusion
Source: The Sowetan
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