Cape Town - Dairy products group Clover may have extricated itself from an uncomfortable arrangement with empowerment giant HCI, but now it faces the challenge of revisiting a black economic empowerment (BEE) deal.
On Monday, Clover proposed re-purchasing all the ordinary shares held in the company by HCI in a R337m transaction that also attached a R156m special dividend paid to the empowerment company on its 38 million preference shares.
HCI, which effectively held a 34.99% stake in Clover, appeared to be an unhappy empowerment partner. HCI and Clover, which has a strong farmer (producer) shareholder base, clashed in the boardroom over the optimum manner in which to recapitalise the diary group.
HCI CEO Johnny Copelyn had already suggested in June last year that the Clover BEE deal was in jeopardy because of these disagreements.
Although HCI is retaining a preference share presence in Clover for the moment, there is an urgent need for the dairy group to make new arrangements around appropriate levels of BEE.
Clover deputy CEO Manie Roode told Fin24.com a new BEE arrangement was already under discussion, intimating that fresh proposals might revolve around empowering the company's staff rather than seeking an outside shareholder.
"We will be looking at a broader-based empowerment initiative. We think something involving our employees would be the way to go...it's a way of aligning interests."
He stressed proposals were still under discussion and that any staff-based BEE deal would be subject to shareholder approval. "It's a completely different approach. Things are still under discussion, and no proposal has been formally signed off."
Clover would not be the first former food cooperative to follow the "staff-based"; empowerment route. A few years ago, Pioneer Foods structured an empowerment deal revolving around its employees.
Putting a sound BEE structure in place would be critical for Clover ahead of a long-awaited application to seek a listing on the JSE.
Fin24.com understands that Clover might initially look at first listing its preference shares, and then follow through with a process to list the company.
Rode confirmed a listing application was under consideration, and reckoned the process would hopefully be completed within 18 months.