Kagiso Trust is to acquire a 27% stakeholding in Bytes Technology Group’s (BTG) South African operations, it was announced on Tuesday.
BTG said it had for some time stated its intention to introduce a black economic empowerment (BEE) partner and had held discussions with various partners, eventually deciding on Kagiso — the investment banking arm of Kagiso Trust Investments — as its BEE partner of choice.
It added that the parties had entered into the transaction as a “proactive measure, prior to the implementation of a BEE charter for the ICT industry”.
The operations involved in the transaction include Bytes Document Solutions (Xerox), National Data Systems (to be renamed Bytes Specialised Solutions), Bytes Communication Systems, Bytes Technology Networks, Bytes Technology Storage, Bytes Business Solutions and Bytes Software, which will be housed in a new subsidiary, Bytes Technology Group South Africa (Bytes SA).
The Kagiso Trust was established to provide assistance to underprivileged communities, with a focus on education, health care and general poverty alleviation.
BTG’s South African operations have been transferred into Bytes SA with effect from March 1 2004.
In terms of the transaction, Kagiso will subscribe for ordinary shares in Bytes SA, which will represent 5% of the increased issued share capital of Bytes SA, for a total cash subscription price of R30-million.
In addition BTG will sell 220 000 “B” shares in Bytes SA, representing 22% of the voting rights in Bytes SA, to a wholly owned subsidiary of Kagiso (Kagiso Sub), at their par value.
Kagiso will thereafter control 27% of the voting rights in Bytes SA, with BTG controlling the remaining 73%.
Kagiso Sub will simultaneously advance to Bytes SA a loan of R198-million bearing interest at the higher of a normal commercial rate and a rate derived from Bytes SA’s effective dividend yield, repayable after five years. Factored into the transaction is the fact that Bytes SA will assume approximately R309-million of BTG’s existing debt. — I-Net Bridge