Consumer Industries Editor
CAPE TOWN Telecommunications, media and entertainment group Johnnic Holdings is unbundling R7bn worth, or 31,9% of the shares in issue, from its 36% stake in MTN Group to its shareholders.
The deal marks the splitting of the investment holding group into a separate telecommunications and media and entertainment entity.
Johnnic chief operating officer Jacob Modise said yesterday the group had evolved over the past five years into a focused telecommunications, media and entertainment group, based on a convergence model where media and entertainment would provide the content for distribution on various platforms, including telecommunications. Now that this strategy had matured, central control was no longer necessary. Convergence would continue at a slower rate and it could be achieved through strong alliances between groups.
"The unbundling will unlock a substantial portion of the discount at which Johnnic shares traded to its underlying net asset value," Modise said.
Johnnic said in February that it would unbundle its MTN shares, though at that stage there was still uncertainty about the amount it would distribute and the funding of its commitments in the Sun Coast Casino and Entertainment World.
It has decided to unbundle 527- million MTN Group shares in the ratio of 3,16539 MTN shares for every one Johnnic share held. As a result of the recent acquisition of 18,7% of MTN Group by MTN management, Johnnic's board agreed there was no longer a need to maintain the control structure to ensure empowerment in MTN. The MTN management stake and the 9% stake that the National Empowerment Consortium would hold in MTN Group after the unbundling, gives MTN an empowerment shareholding of just under 30%.
As far as its commitments to the Sun Coast casino are concerned, Johnnic has realised R395m. Johnnic will retain 40million MTN Group shares to fund a corporate guarantee for the casino and further working capital for the company.
Modise said Johnnic was required within the next six months by the rules of the JSE Securities Exchange SA to address the pyramid structure that has resulted in relation to its holding in Johnnic Communications, the media and entertainment group that holds 50% of BDFM, publisher of Business Day.
May 13 2003 07:01:33:000AM Charlotte Mathews Business Day 1st Edition
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