Justifying the top-heavy composition of her company's new BEE structure, ArcelorMittal (Amsa) chief executive Nku Nyembezi-Heita this week said that "strategic" as opposed to broad-based investors are included "where a company needs assistance in a particular area". For "strategic", read politically connected; for "assistance", read lobbying with government. So what are the lobbying fees, and to whom do they go?
An investment vehicle led by Duduzane Zuma, President Jacob Zuma's 28-year-old son, will gain shares with a face value approaching R1-billion, and Gugu Mtshali, reportedly Deputy President Kgalema Motlanthe's romantic partner, will get face-value shares plus cash totalling over a third of a billion rand.
The investment company of Sandile Zungu -- a member of President Zuma's broad-based empowerment advisory counsel once tipped to be director general in the Presidency -- will get shares with a face value approaching half-a-billion rand. Ditto the Gupta family, friends and benefactors to President Zuma.
The largest single benefit -- face-value shares and cash totalling R2,2-billion -- will go to Jagdish Parekh, chief executive of the Guptas' investment vehicle. He is half-owner of Imperial Crown Trading, the upstart company that was in a prime bargaining position after controversially winning a stake in the Sishen iron mine that previously belonged to Amsa.
Amsa, however, will not be out of pocket. Even though the Ayigobi Consortium will get shares based on ArcelorMittal's market capitalisation with a total face value of R7,33-billion, their economic value appears to be circumscribed by a floor of R728-million and a cap of R1,67-billion, depending on ArcelorMittal's share-price performance. This means the benefit breaks down as follows:
* Duduzane Zuma-led Mabengela Investments (12,5% of Ayigobi Consortium): shares with a face value of R916-million, but economic value of between R91-million and R209-million. Zuma is believed to own up to 50% of Mabengela, which would give him personal economic value of R46-million to R104-million.
* Gugu Mtshali (about 4,2% of Ayigobi): face value about R300-million, economic value of between R30-million and R70-million. As one of the owners of Imperial Crown Trading, she also stands to get R67-million in the related R800-million cash buy-out of Imperial Crown's shareholders.
* Zungu-led Zico special purpose vehicle (6,25% of Ayigobi): face value R458-million, economic value R46-million to R104-million.
* Gupta family-owned Oakbay Investments (6,25% of Ayigobi): face value R458-million, economic value R46-million to R104-million.
* Jagdish Parekh (25% of Ayigobi): face value R1,83-billion, economic value R182-million to R418-million. As 50% owner of Imperial Crown, he also qualifies for a cash pay-out of R400-million.
Parekh, Mtshali and other Imperial Crown shareholders had a gun to Amsa's head because of their disputed Sishen mine stake. But how did the Guptas get their stake, and how did Duduzane Zuma's company get a stake twice as large as theirs -- or, for that matter, twice that of Ayigobi "leader" Zungu?
Nyembezi-Heita told Moneyweb radio this week that the Guptas had been cut in as "major facilitators" of the deal. An Ayigobi spokesperson, who asked not to be identified, echoed this, saying the Guptas had provided "advisory and facilitation services".
Asked why the president's son's company should get a stake as large as the Guptas' and Zungu's combined, the spokesperson was stumped, saying: "I can see what you're saying: Was there a greater contribution from Mabengela [Investments] to warrant it? Or was it purely based on the fact that he's the president's son that he qualifies for that additional percentage? That I don't know. I cannot answer you for sure."
Source: Mail & Guardian
Showing posts with label Sandile Zungu. Show all posts
Showing posts with label Sandile Zungu. Show all posts
Friday, August 13, 2010
Tuesday, August 10, 2010
Zuma's son involved in R9bn BEE deal
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
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
Friday, February 5, 2010
New body to expedite empowerment
THE government is banking on the recently appointed Broad-Based Black Economic Empowerment Council to speed up implementation of its affirmative action policy. The government’s economic transformation programme has been blamed for alienating the white community, while creating new social inequalities, especially among its intended beneficiaries.
The 19-member body, which is chaired by President Jacob Zuma , was officially launched yesterday. “We want it to give advice that will lead to action,” said Trade and Industry Minister Rob Davies . With its members appointed by the president, the council is a statutory body created in terms of the Broad-Based Black Economic Empowerment Act. It replaces a black business working group that advised former president Thabo Mbeki. “The sense that we all have is that progress of BEE to date has been modest,” Davies said. He said there was a need to review the codes of good practice “to see what is wrong with them, if anything”. There was a need to conduct research on the effect of black economic empowerment to date, and also on big deals concluded so far. Standing in for Zuma, Deputy President Kgalema Motlanthe said the government could no longer tolerate the current status of BEE, which in the past 15 years had benefited a handful of individuals. “Only a few benefited again and again from the bounty of black economic empowerment,” he said. The “truly marginalised” — women, the rural poor, workers and the unemployed — were left on the sidelines.
It was important to look at BBBEE beyond business deals and shareholding in companies, to include equipping people to run their own businesses. “More must be enrolled in skills training and more should have access to arable land.” The BBBEE council includes Congress of South African Trade Unions president S’dumo Dlamini, Business Unity of SA CEO Jerry Vilakazi, and businessmen Sandile Zungu and Don Mkhwanazi. Other government officials were Economic Development Minister Ebrahim Patel, Labour Minister Membathisi Mdladlana , and Minister of Women, Children and Persons with Disabilities Noluthando Mayende-Sibiya.
The council would meet at least four times a year in plenaries. But it was expected that the bulk of the work would take place through subcommittees to be established when it convened within six weeks . Motlanthe said it was wrong to think that the government did not want black people to be wealthy, just as it was unwise to dismiss critics of black economic empowerment. “The critics must accept that the exclusion of a large section of our community from productive participation in the economic life of our society is a significant hindrance to our collective prosperity.”
Source: Business Day
The 19-member body, which is chaired by President Jacob Zuma , was officially launched yesterday. “We want it to give advice that will lead to action,” said Trade and Industry Minister Rob Davies . With its members appointed by the president, the council is a statutory body created in terms of the Broad-Based Black Economic Empowerment Act. It replaces a black business working group that advised former president Thabo Mbeki. “The sense that we all have is that progress of BEE to date has been modest,” Davies said. He said there was a need to review the codes of good practice “to see what is wrong with them, if anything”. There was a need to conduct research on the effect of black economic empowerment to date, and also on big deals concluded so far. Standing in for Zuma, Deputy President Kgalema Motlanthe said the government could no longer tolerate the current status of BEE, which in the past 15 years had benefited a handful of individuals. “Only a few benefited again and again from the bounty of black economic empowerment,” he said. The “truly marginalised” — women, the rural poor, workers and the unemployed — were left on the sidelines.
It was important to look at BBBEE beyond business deals and shareholding in companies, to include equipping people to run their own businesses. “More must be enrolled in skills training and more should have access to arable land.” The BBBEE council includes Congress of South African Trade Unions president S’dumo Dlamini, Business Unity of SA CEO Jerry Vilakazi, and businessmen Sandile Zungu and Don Mkhwanazi. Other government officials were Economic Development Minister Ebrahim Patel, Labour Minister Membathisi Mdladlana , and Minister of Women, Children and Persons with Disabilities Noluthando Mayende-Sibiya.
The council would meet at least four times a year in plenaries. But it was expected that the bulk of the work would take place through subcommittees to be established when it convened within six weeks . Motlanthe said it was wrong to think that the government did not want black people to be wealthy, just as it was unwise to dismiss critics of black economic empowerment. “The critics must accept that the exclusion of a large section of our community from productive participation in the economic life of our society is a significant hindrance to our collective prosperity.”
Source: Business Day
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