Pulp and paper group Sappi has announced that as part of its ongoing support of the South African government’s broad-based black economic empowerment (BEE) objectives, 25% of its South African plantation land portfolio would be sold to an empowerment consortium.
Sappi, one of South Africa’s largest landowners, owns in excess of 360 000ha of plantation land across its commercial operations. A portion of this land is underutilised and an opportunity has been identified to partner with an empowerment consortium to develop certain areas of the land for mutual economic benefit.
In terms of the transaction, Sappi will sell a 25% undivided ownership share in the Sappi plantation land holdings to an empowerment consortium called Lereko Property Consortium (LPC). The consortium is led by Lereko Investments and will also include meaningful participation by Sappi employees through a workers’ trust and by Malibongwe Women’s Development, a non-profit organisation focusing on the upliftment of women in South Africa.
Sappi’s land holdings, excluding the value of standing timber, have a market value of approximately R900-million and the 25% share will therefore be sold to LPC for an amount of R224-million.
Commenting on the transaction, Andre Wagenaar, CEO of Sappi’s Southern African businesses said: “At Sappi, we believe that black economic empowerment is an economic imperative. It is not a cost of doing business in South Africa, but rather an opportunity to broaden participation in the growth of the economy.
“Sappi, as one of South Africa’s largest landowners, is putting an indivisible interest in the land directly into empowerment hands. Lereko, our empowerment partner, has the right credentials and expertise for a long-term relationship and to take charge of the process to develop the land to our mutual benefit.
“The transaction is simple and transparent and symbolises our commitment to broad-based and effective empowerment and also meets our strong commitment to the principles of sustainable development.”
Lereko Investments principal, Valli Moosa, speaking on behalf of the whole consortium, added: “We are privileged to be part of this transaction and excited about the opportunities it presents. The land acquired has multi-faceted uses and our objective is to identify and implement property development initiatives across non-plantation areas of land. Proper development will allow for job creation and interaction with local communities. The experience and expertise of all consortium members will enable the unlocking of value for all stakeholders.” — I-Net Bridge