Building materials group Lafarge South Africa on Friday signed a R1,1-billion empowerment deal with consortium Sinako that may result in 26% of its quarries and 10% of its manufacturing businesses in South Africa being sold.
Lafarge Mining incorporates aggregates and limestone, and Lafarge Industries incorporates cement, gypsum-plasterboard and ready mix concrete manufacturing.
The Sinako consortium will hold 75% of the empowerment stake and Lafarge historically disadvantaged South African (HSDA) employees will hold the 25% of the empowerment stake in the employee-share ownership programme (Esop) trust.
Sinako means “we can” in Xhosa.
The Esop trust will benefit more than 1 400 current and future HDSA employees and management, the parties said.
Sinako will raise the full purchase price of its interest in Lafarge operations in the form of a cash contribution by Peatona and Motjodi, third party funding and 70% will be vendor financed by Lafarge.
The financing for the transaction is yet to be raised, but negotiations with financial institutions are ongoing.
The debt financing is expected to be priced at an interest rate of 25 to 100 basis points below the South African prime interest rate, which is currently at 11,5%.
Sinako is looking to pay off its debt within 10 years and is seeking to acquire a 19,5% stake in Lafarge Mining and 7,5% in Lafarge Industries for R825-million.
The Esop trust will acquire a R275-million interest in Lafarge operations, comprising a 6,5% interest in Lafarge Mining and 2,5% in Lafarge Industries.
The price for the Esop transaction will be fully vendor financed by Lafarge, the parties said. — I-Net Bridge