Listed packaging group Nampak on Thursday announced that it has reached agreement to conclude a 10% black economic empowerment (BEE) transaction pursuant to which approximately 5% of the issued share capital of Nampak will be owned by Nampak employees and 5% will be owned by BEE groups comprising a broad base of black people.
The proposed BEE transaction has a value of approximately R980,97-million based on the 30-day volume-weighted average price per share to August 15 of R15,13.
Due to the fact that Nampak holds significant offshore assets, the transaction represents approximately 12% of the value of its South African operations.
The proposed BEE transaction entails the creation of three special purpose vehicles for the purpose of owning shares in Nampak.
The Nampak Employee Share Trust (NEST) will be created for the benefit of all of its permanent employees in South Africa who are not beneficiaries of Nampak’s existing share incentive scheme and who will not participate elsewhere as beneficiaries of the proposed BEE transaction.
The NEST will benefit approximately 10 200 permanent employees in South Africa.
The Black Management Trust (BMT) will be created for the benefit of Nampak’s black permanent employees in South Africa who are classified by Nampak as management.
The group said “black” for the purposes of the announcement refers to historically disadvantaged individuals and includes African, coloured and Asian people.
The trust will initially benefit approximately 480 employees, but the number of beneficiaries is expected to increase over time.
A special purpose company to be initially known as Red Coral Investments 23 will be created for the benefit of third-party BEE companies, broad-based BEE groups and existing Nampak black non-executive directors, collectively referred to as the BEE parties.
Nampak will issue 5 610 000 ordinary shares to the NEST, on behalf of its beneficiaries, equivalent to 0,88% of its net shares in issue (net shares in issue refers to Nampak’s issued shares net of treasury shares) at their par value of five cents.
Nampak will make a grant of R280 500 to the NEST to facilitate the issue of the shares.
The NEST will provide Nampak with BEE ownership credentials of approximately 0,7% of its net shares in issue, as the interest of white employees will be excluded for BEE purposes.
Nampak will issue 27 369 195 ordinary shares to the BMT, equivalent to 4,3% of its net shares in issue.
Nampak will fund the BMT for the purchase of the ordinary shares and will issue to Red Coral a new class of share (preferred ordinary share) equivalent to 5% of its net shares in issue, which will entitle Red Coral to fixed and preferential dividends for a period of approximately five years.
The group added that approximately 58% of the preferred ordinary shares would be issued to Red Coral at R15,13 being the Nampak 30-day volume-weighted average price per share to August 15.
Approximately 42% of the preferred ordinary shares will be issued at their par value through a structure whereby Nampak shareholders effectively provide Red Coral with 10-year facilitation.
Nampak said this will enable Red Coral to procure the majority of its total funding requirement from third-party financiers.
According to the company, the primary purpose of the preferred ordinary shares is to provide certainty to the BEE groups and third party financiers as to the dividend available to service the funding.
In order to mitigate the dilution arising from the issue of the ordinary and preferred ordinary shares described above, Nampak will propose a scheme of arrangement in terms of Section 311 of the Companies Act (No 61 of 1973, as amended) between itself and its ordinary shareholders.
Nampak said it is its stated objective to embrace broad-based BEE and achieve real transformation.
The company added that it is confident that BEE will deliver long-term economic benefits to the country, the economy and to the group.
Nampak’s BEE partners — including Aka Capital Consortium, which will be led by Aka Capital — will hold at least 92% of the Aka Consortium’s shareholding.
The Aka Capital executive team, led by Reuel Khoza (executive chairperson), Sam Nematswerani (CEO) and Gary Morolo (executive director), brings hands-on experience in business leadership, strategy, marketing and transformation.
Nampak said it identified Aka Capital as a suitable anchor partner having the ability to add value at a strategic level; strong understanding of the South African and African business environment; a long history with Nampak at leadership level; a long and successful track record; and its commitment to uplifting black South Africans.
The Aka Consortium will hold 56% of the shares in Red Coral, representing approximately 2,8% of Nampak’s net shares in issue.
Nampak has invited its two incumbent black non-executive directors, namely ML Ndlovu and KM Mokoape, to participate in the proposed BEE transaction in their personal capacities.
These non-executive directors will participate in Red Coral on similar terms to Nampak’s other BEE partners and will beneficially hold 4% of Red Coral.
Each black non-executive director will hold a beneficial interest of not more than 0,1% of Nampak’s net shares in issue in terms of this invitation.
The other broad-based BEE shareholders will include two of the major unions that have significant representation among Nampak’s employees in South Africa, namely the Chemical, Energy, Paper, Printing, Wood and Allied Workers’ Union and the South African Typographical
Union.
In addition, a broad-based women’s grouping, the National African Women’s Alliance, has accepted an invitation to participate.
The details of the participation of these organisations are being finalised.
The BEE parties will not be entitled to sell their ordinary shares in Red Coral, nor will Red Coral be entitled to sell any of its preferred ordinary shares or ordinary shares, prior to the expiry of a 10-year period.
The BEE parties will be subject to a restraint of trade, in terms of which they will be restrained from investing in businesses that compete directly with Nampak.
The BEE parties will also be restrained from investing in businesses that constitute major suppliers or customers of Nampak.
This restraint will apply for the duration of the proposed BEE transaction.
Nampak will have pre-emptive rights over any disposals of the preferred ordinary shares or ordinary shares by Red Coral; and subject to the invitation and approval of the board of Nampak, Aka Capital will be entitled to propose appropriate individuals to represent them on the board of Nampak and/or its operating subsidiaries/divisions. — I-Net Bridge