WBHO introduces BEE shareholding

Posted On Wednesday, 13 September 2006 02:00 Published by eProp Commercial Property News
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Wilson Bayly Holmes - Ovcon has concluded a Black Economic Empowerment agreement for the facilitation of black equity ownership into WBHO.

Construction IndustryWilson Bayly Holmes - Ovcon (WBO, WBHO) announced that it had concluded a Black Economic Empowerment (BEE) agreement for the facilitation of black equity ownership into WBHO in terms of which a group of black people including a significant proportion of WBHO's permanent employees would acquire a shareholding in WBHO.
It was envisaged that the BEE consortium would be introduced via a new company to be renamed Akani Investment Holdings, (Akani means "we are building"
in Shangaan), the company said.
WBHO will issue 9,989,000 new WBHO ordinary shares (15% of the issued share capital of the company) to Akani at a subscription price of one cent per share.
The subscription shares will rank pari passu in all respects with the existing issued ordinary shares of WBHO.
"WBHO supports the South African Government's BEE initiatives and in doing so is actively involved in the transformation of the construction industry.
"WBHO recognises the importance of BEE as a key driver of sustainable economic growth and positive transformation in South Africa.
"As part of WBHO's BEE ownership strategy, the board has sought partners that will assist it in, inter alia, enhancing its growth prospects and will make a positive contribution to WBHO in terms of its transformation initiatives, relationships with the public and private sector and in developing business opportunities," the company said.
Further, the group said that it was its intention "to embrace broad-based BEE as the foundation of its BEE ownership strategy, including the upliftment of the employees of the WBHO group."
"Accordingly, a significant portion of the equity available under the proposed BEE transaction has been set aside for existing and future employees of the WBHO group."
In structuring the proposed BEE transaction, WBHO developed a set of key objectives aimed at sustainable, broad-based empowerment to ensure that the BEE consortium included a broad base of black people; economic benefits and voting rights were transferred to the BEE consortium from the inception of the proposed BEE transaction, thereby ensuring that the ownership requirements of the Codes of Good Practice on Broad-Based BEE published by the Department of

Trade and Industry and the Construction Industry Charter were met.
WBHO wished to ensure that in particular the strategic black partners participating in the proposed BEE transaction received cash flows (one third of all distributions received) for the term of the proposed BEE transaction; that the black partners or their approved successors remain shareholders of WBHO for at least ten years; that the proposed BEE transaction was sustainable and value enhancing for the BEE consortium; and that the proposed BEE transaction was transparent with an acceptable upfront economic cost to existing shareholders and no undue dilution of their shareholding.
WBHO added that three black partners had been identified to be included in the proposed BEE transaction initially, namely James Ngobeni; Nonhlanhla
Mjoli-Mncube; and Savannah Maziya.
"The black partners have previous experience in the construction and mining industries. Specifically, James and Nonhlanhla were involved in the development of the Construction Sector Charter and Nonhlanhla and Savannah hold seats on the Construction Industry Development Board," the company noted.
WBHO has estimated the economic cost of the proposed BEE transaction to WBHO shareholders utilising recognised financial risk pricing and valuation methodologies to be approximately 58.6 million rand based on the WBHO share price as at the last practicable date, being 29 August 2006, of 58.50 rand, which equates to approximately 1.8% of WBHO's market capitalisation.
Of the 58.6 million rand estimated economic cost approximately 32.2 million rand relates to the WBHO shares to be held by the Employee Trust, which cost will continue into the future and be amortised over the five year vesting period of the Broad-Based Employee Scheme.
The proposed BEE transaction is conditional on the fulfilment of the following conditions precedent, by no later than 31 October 2006:
    - the approval and where necessary registration of the resolutions of the shareholders of WBHO approving:
    - the specific issue of shares by the requisite majority of WBHO shareholders; and
    - the repurchase of shares in terms of the share repurchase by the requisite majority of WBHO shareholders.


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