A South African black economic empowerment (BEE) consortium — Dinatla — is to make an offer to South African industrial services group Bidvest shareholders for 15% of the group. The deal is worth approximately R2-billion.
Dinatla is a new broad-based empowerment entity comprising WDB Investment Holdings, Makana Investments and Bassap Investments, with substantial provincial empowerment representation.
The proposed offer is inclusive of both local and international assets, Bidvest said in a statement. Brian Joffe, Bidvest’s Executive Chairman, commented: “This innovative and unique initiative should position Bidvest for participation in private and public opportunities providing us with an additional platform for growth in the future.
The initiative will significantly raise Bidvest’s BEE ownership profile and combined with the Bidvest Enterprise-Based Charter should enable the group to achieve favourable empowerment status in terms of the balanced scorecard of the Department of Trade and Industry Strategy for Broad-based BEE.
Bidvest, together with Dinatla, is developing an enterprise-based charter that will embody the group’s empowerment aspirations. The Charter will provide an overall framework for the group’s continuing BEE transformation.
In terms of the proposed deal, Dinatla will propose a scheme of arrangement whereby it will, with effect from 1 October 2003, acquire 15% of the issued share capital of Bidvest ex all distributions until 1 October 2006, pro rata from all the Bidvest shareholders.
The consideration for the acquired Bidvest shares to be discharged in October 2006, will be determined with reference to the 30 day weighted average market price of a Bidvest share traded on the JSE immediately prior to this date, with a minimum price of R42 and maximum price of R60 per share, the group said.
A new company (Newco) will be established for the specific purpose of owning, managing and distributing the scheme consideration. The scheme consideration due by Dinatla to Newco will be guaranteed by the pledge of the acquired Bidvest shares. The Newco securities will be listed on the main board of the JSE in the Specialist Securities Sector (Investment Products).
In October 2006, Dinatla will settle the scheme consideration to Newco either by cash or through the return of the acquired Bidvest shares. The acquired Bidvest shares owned by Dinatla after settlement of the scheme consideration will be held for a further period of at least 5 years.
Furthermore, Bidvest will grant the right to all Bidvest shareholders in October 2006, excluding Dinatla, to subscribe pro rata to their shareholding for 18-million new Bidvest shares at a strike price of R60 per share.
In addition, the Bidvest-Dinatla Trust has been founded to serve the educational needs of Bidvest’s HDI employees. Until such time as the Bidvest-Dinatla Trust is income-producing, Bidvest has undertaken to provide an initial injection of one million rand to facilitate the education and training of selected HDI Bidvest employees and their dependents.
As the scheme is between Dinatla and existing shareholders, there would be no direct financial effect on Bidvest. The financial benefits to Bidvest emanating from the BEE initiative are difficult to quantify, but are expected to be significant in the future, Bidvest said. A further announcement regarding the proposed scheme, including the timing and details, will be announced in due course. Accordingly, shareholders are advised to exercise caution when dealing in the Bidvest shares until a further announcement is made, the company said. – I-Net Bridge