MTN PAYS OUT R3,2bn BEFORE NEW BEE DEAL
MTN is eager to launch a new BEE deal that will benefit the public after announcing the unwinding of its current empowerment vehicle.
The cellular operator, which boasts the largest network in Africa, will be issuing a R3,2 billion (1,8 percent of MTN) special dividend in the first step of the process to dissolve its black economic investment vehicle.
In 2002 Newshelf Pty Ltd was established and held by the Alpine Trust to acquire 18,7 percent of MTN's ordinary shares over a six year period.
The company said on Monday: "Subject to appropriate financial market conditions, MTN intends to make proposals to its shareholders to implement a new BEE transaction during the first half of 2009.
"The purpose of the Newshelf acquisition is to facilitate the orderly unwinding of the Newshelf structure and to minimise the dilutionary impact of the BEE transaction on earnings going forward."
During 2007 some of the shares were sold off to the Public Investment Corporation, leaving Newshelf with a 13,1 percent (R23,4billion) shareholding in MTN.
The unwinding will pay out to 3200 beneficiaries and mean a significant reduction of the company's BEE status.
These beneficiaries are a combination of historically disadvantaged MTN employees and eligible senior staff members, including chief executive Phutuma Nhleko and chief operating officer Sifiso Ndabengwa.
MTN said the R3,2billion special would be paid to beneficiaries in early 2009 with the remaining R20billion to be paid at an unspecified date.
Lindsey McDonald, ICT analyst at Frost and Sullivan, said the company would want to keep a favourable BEE scorecard.
She said: "This deal will make up for any loss in BEE rating."
But the company said it would sell only five to six percent of its issued share capital.
"This will amount to 21 to 25 percent of its South African operations. This wouldn't amount to the same score that they currently have," said Cadiz Asset Management analyst Rajay Ambekar.
He said the company would issue a public offer similar to Sasol's Inzalo and Vodacom's YeboYethu offers.
When the Newshelf unwinding is concluded, employees who were locked in will be able to take their money and leave.