| Thu 12 Jun 2008, 7:32 | | BAW / BAWP - Barloworld announces significant broad-based BEE transaction |
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BAW BAWP
BAW
BAW / BAWP - Barloworld announces significant broad-based BEE transaction
Press Release
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
JSE share code: BAW
JSE ISIN: ZAE000026639
JSE share code: BAWP
JSE ISIN: ZAE000026647
("Barloworld")
Barloworld announces significant broad-based BEE transaction
Employees, Community Service Groups, Educational Trust and
Strategic Black Partners
Transaction value R2.4 billion will achieve effective 29% empowerment of SA
operations
Barloworld is delighted to announce its broad-based black economic
empowerment ("BEE") transaction. The transaction will result in an
additional 10% black shareholding in the ordinary share capital of Barloworld
and is broad-based, including employees, community service groups, an
education trust and strategic black partners. It achieves an effective
28.99% empowerment of Barloworld`s South African operations.
Clive Thomson, CEO of Barloworld commented: "We are committed to being
leaders in empowerment and transformation in South Africa in all aspects.
Today`s announcement heralds a significant achievement at the equity level.
In this transaction, we will create, together with our strategic black
partners, employees, community service groups and an educational trust a
meaningful empowered company. All participants will benefit from
Barloworld`s growth both locally and internationally as the shareholding is
at the listed company level."
Barloworld believes that the BEE transaction embraces the spirit of
empowerment whilst taking cognisance of the DTI Codes and the goals of its
BEE strategy.
Strategic black partners will be allocated 5.88% of Barloworld`s ordinary
issued share capital after the implementation in full of the BEE transaction.
Employees, black management and black non-executive directors will be
allocated 2.39%, an educational trust 0.78% and community service groups
0.95%. There are three internal and three external strategic black partner
groups.
The internal partners are The Gandaganda Empowerment Trust (1.33%), Zwavhudi
Investment Holdings (Proprietary) Limited (0.44%) and the Y and J Family
Trusts (0.67%). There will also be another internal partner, which is
intended to be sourced from the automotive business, to be announced in due
course with a 0.44% shareholding. The external partners are Ayavuna Women`s
Investments (Proprietary) Limited (1.50%), Moty Capital Partners Consortium
(Proprietary) Limited (0.75%) and Izingwe BAW Holdings (Proprietary) Limited
(0.75%).
Gandaganda is led by Dominic Sewela, CEO of Barloworld Equipment SA. The
trust includes entrepreneurs and emerging business women and a trust still to
be formed for the black employees of Barloworld Equipment (South Africa).
Dominic Sewela said: "This is our first BEE investment. Barloworld has been
committed to the principles of BBBEE for a long time and as employees we are
delighted to be selected as strategic partners in the equity transaction. We
will seek to add particular value by deploying full time employees to
Barloworld Equipment as the company continues to grow."
Zwavhudi was formed by Litha Nkombisa, CEO of Barloworld Motor Retail
Southern Africa and Ciko Thomas, Marketing Director of Barloworld Automotive.
They were joint owners of Joburg City Auto BMW and VW Joburg City prior to
joining Barloworld.
Litha Nkombisa said: "We are pleased that Barloworld should decide to include
key black management in the company as strategic partners. We have already
embraced the prevailing spirit, work ethic and determination within
Barloworld to ensure that its businesses grow profitably into the future and
that opportunities for its employees continue to be developed."
Yunus and Judada Akoo are the founders of the YJ Family Trusts and have had a
relationship with Barloworld since 2003 through various motor dealerships in
Durban and Pietemaritzburg. The Akoo family has been active in the retail
motor industry since 1980.
Yunus Akoo commented: "We have worked with Barloworld for some years and are
excited to be able to participate in their equity transaction. This will mean
an even closer relationship with the company and increases our determination
to contribute to the success of the business."
Ayavuna Women`s Investments is led by Hixonia Nyasulu, a non-executive
director of Barloworld. It is an investment company owned and managed by
black women established for the benefit of black women.
Hixonia Nyasulu said, "Our involvement in this transaction adds diversity in
the form of black women with a rural development angle. Many black women
have benefited from our activities over the years, most recently three rural
girls high schools from a R3.3m donation."
Moty Capital Partners formed a consortium specifically for the Barloworld BEE
initiative. It is broad-based comprising experienced black business people,
trade and hawkers associations, charitable trusts and youth.
Bheki Sibiya, chairman of Moty said: "As a consortium we are in a position
to provide a ready market for Barloworld`s products through our contact
network and can assist the company with their expansion into Africa and also
with their transformation and leadership. We are a very broad-based
consortium and over 100,000 black people should benefit."
Izingwe Holdings is a significant investor in mining, engineering and
infrastructure development and are suppliers to those sectors.
Sipho Pityana of Izingwe said, "We are active shareholders always seeking to
make value enhancing interventions for our underlying investments. We know
the sectors in which Barloworld operates well and expect to make a meaningful
contribution to the business."
South African employees, over 60% of whom are black, are to benefit
substantially from the transaction. Employees will be allocated 1% of the
shares in the transaction. The average share value for each employee is
R15,000 as a minimum. Additionally, current and future black managers will
participate in 1.35% of the equity. The objective is to attract, retain and
incentivise such employees. Existing black non-executive directors will be
allocated 0.04% of the equity.
Clive Thomson, said: "The employee participation in our BEE transaction is
an essential element. The success of our business lies in the hands of our
employees and it is important that their interests are aligned with that of
the company. Additionally, it is vital that we create mechanisms to attract
and retain future black management into the Barloworld organisation."
An education trust has been established to provide educational grants and
other benefits to primarily black persons with educational needs.
Additionally, Barloworld has welcomed community focused organisations to
participate in the BEE transaction. Three groups were selected being the DEC
Investment Holding Company (Proprietary) Limited, Ikamva Labantu Empowerment
Trust and the Shalamuka Foundation, whose collective objectives are the
upliftment of previously disadvantaged communities. Each group will
participate equally in the equity.
The Disability Empowerment Concern Trust, the sole shareholder of the DEC
Investment Holding Company (Proprietary) Limited was established in 1996
representing people with disabilities. Ikamva Labantu Empowerment Trust was
founded in the late 1960`s to provide primary health, education, skills
development, food security, enterprise development and provision of shelter.
The Shalamuka Foundation was formed in 2006 to raise long term sustainable
funding for the highly regarded Penreach programme, which provides teacher
skills workshops to about 2,000 public school teachers in 900 schools.
A robust selection process was used to decide the strategic black partner and
community service group participation. Participants were required to
demonstrate their ability to add value to Barloworld as well as their BEE
credentials, broad-based black shareholding level and women shareholding
level. A rating scale devised from the DTI Codes was used in the initial
screening process and final recommendations were made by Barloworld`s
empowerment and transformation committee to the Barloworld board.
Clive Thomson commented: "We set out to ensure that our BEE transaction was
very broad-based so that as many black people as possible would benefit. We
believe we have achieved this with all the various groupings after a very
extensive selection process. Additionally, it is important that our
strategic black partners can add value to the Barloworld business and with
the selection of both internal and external partners, we think we have a
powerful combination."
Barloworld has facilitated the transaction in a number of ways. There will be
a cash contribution by employers to a trust to acquire shares for the
employees and non-executive directors. The Black Managers Trust and the
Education Trust are being provided with vendor facilitation to acquire
Barloworld shares and the strategic black partners and community service
groups are, inter alia, able to raise funding at Barloworld`s credit margin.
The economic cost to shareholders is in line with the cost of other recent
BEE transactions.
Barloworld will benefit from the transaction in converting existing short
term funding to long term funding through the strategic black partner and
community service group facilitation arrangement.
This BEE equity transaction is only one leg of Barloworld`s overall
transformation strategy. The company`s BEE policy has been in place for over
four years. Barloworld has been tackling empowerment on all fronts including
equity ownership, enterprise development, employment equity, affirmative
procurement, skills development and training and corporate social investment.
There have also been BEE equity transactions at the subsidiary level,
including the Logistics and Automotive businesses. Barloworld Siyakhula, the
company`s enterprise development initiative was launched last October.
Barloworld has also recently appointed a number of black executives into
senior positions across the group. Three of these executives, namely Dominic
Sewela, Isaac Shongwe, and Litha Nkombisa have CEO responsibility
respectively for Barloworld Equipment South Africa, Barloworld Logistics
Africa and Barloworld Motor retail southern Africa. These businesses
collectively represent the majority of the profitability of the group`s South
African operations.
Barloworld`s objective is to ensure that its South African businesses achieve
at least a Level 5 rating in terms of the BBBEE Codes of Best Practice by the
end of 2008 and we are on track for this following the implementation of this
transaction. The company is targeting a Level 4 rating for each business by
the end of 2009, giving a BEE recognition level of 100% in terms of the
Codes.
Clive Thomson said: "Empowerment and transformation is one of the five key
strategic focus areas for Barloworld. I have been very pleased at the
progress we have made on a number of levels over the last year or so,
particularly in making several senior black executive appointments. Our BEE
transaction is another important milestone in achieving our empowerment and
transformation objectives"
This BEE transaction is subject, inter alia, to the approval of shareholders
at a general meeting anticipated to be held on 12th August 2008 (according to
latest timetable). The effective date of the BEE transaction is expected to
be on or about 25th August 2008.
12 June 2008
Enquiries:
Barloworld +27 11 445 1000
Clive Thomson
Sibani Mngomezulu
College Hill +27 11 447 3030
Nick Williams +27 82 600 2192
Jacques de Bie +27 82 691 5384
There will be a presentation at 12.00 noon today at Barloworld`s office at
Barloworld Corporate Office, 180 Katherine Street, Sandton. There is also a
media discussion and Q&A at 13.30.
Date: 12/06/2008 07:32:00 Produced by the JSE SENS Department.
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