South African paper and pulp group Mondi, wholly owned by Anglo American, on Thursday unveiled the country’s first paper and packaging empowerment deal with MCI Resources, led by Cyril Ramaphosa and James Motlatsi.
In terms of the agreement, MCI will take a 42% stake in Mondi’s newsprint business division based in KwaZulu-Natal, with a further 8% to be sold to other empowerment concerns, which will result in Mondi having a 50% stake in the division.
The extra 8% stake in the newsprint division is likely to be sold to community groups and employees of the division.
After the conclusion of the deal, expected by the end of 2004, empowerment groupings will have a 10% stake in Mondi South Africa.
The deal will be financed by a combination of equity, mezzanine debt provided by Mondi and non-recourse long-debt, said chairperson and CEO of Mondi South Africa Andrew Thompson.
“Both sides have been careful in structuring the deal so that its financing works,” Thompson said.
Mondi’s newsprint business has an annual revenue of about R1,1-billion.
The business is a major southern hemisphere producer of newsprint and manufactures 220 000 tons per year of paper at Mondi’s Merebank mill close to Durban, employing 322 people.
The newsprint business reportedly has close to a 60% domestic market share. — I-Net Bridge