Johannesburg - Basil Read [JSE:BSR] has concluded a R521m
broad-based black economic empowerment (B-BBEE) agreement with Sishen Iron Ore Company
Community Development Trust Investments Holdings.
This will result in Sishen Iron Ore Company (SIOC) holding
an effective 25.1% in the Johannesburg-listed construction company.
Basil Read‚ a level three contributor in terms of
empowerment codes‚ will also improve its B-BBEE rating to level two by way of
the deal.
It said it recognised the importance of transformation‚ and
initiated the transaction with partners who would share in the appreciation of
its share price.
“The transaction will enhance our existing B-BBEE ownership
credentials and complement our non-ownership elements of the Department of
Trade and Industry codes.” CEO Marius Heyns said on Thursday.
Basil Read said it shared a common vision with SIOC over growth
in African mining‚ and a strategic partnership might benefit infrastructure
development within local communities and help boost its order book.
The total value of the transaction was R521.1m‚ of which
R99.3m would be in cash and R421.8m in vendor funding.
The deal was expected to give Basil Read an effective 36%
B-BBEE equity ownership‚ of which 11% was not subject to any lock-in
provisions.
The group said it had undertaken to vendor fund the balance
of the transaction in the interests of complying with the spirit of the
empowerment codes‚ and the aim of achieving a simple and tax-effective
structure.
The transaction was based on a four year lock-in period‚
with an option to extend for one year.
The trust was established in 2006 during the unbundling of
Kumba resources into two companies‚ Kumba Iron Ore and empowered coal and heavy
minerals company‚ Exxaro.
Kumba Iron Ore [JSE:KIO]‚ which owns 74% in SIOC‚ funded the
purchase of SIOC shares by issuing R458m in preference shares.
The rest of SIOC is owned by Exxaro Resources [JSE:EXX]‚ the
SIOC Employee Share Participation Scheme and the trust.
This was to benefit communities around the Sishen‚ Sishen
South and Thabazimbi iron ore mines in the Northern Cape and Limpopo provinces.
More than 300 000 black families were beneficiaries of the
trust‚ which was the sole beneficiary of 3% of the ordinary shares in SIOC.
These shares will be redeemed over time using the dividend
flows from the shareholding.
Michael Dale from Deloitte Corporate Finance said his team
had achieved a “simple‚ tax efficient structure with a meaningful equity
contribution and vendor funding on commercial terms.”
Connie Molusi‚ chairperson of both the trust and SIOC board‚
said the investment reflected the trust’s commitment to preserve and grow the
balance sheet of beneficiary communities over the next seven to 10 years.