Absa-Batho Bonke deal must benefit the poor'
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BATHO Bonke has a lot of work ahead of it before it can unveil the members of its consortium, scheduled for announcement for September this year.
On Tuesday Absa, Tokyo Sexwale and the two co-promoters of his consortium, Nthobi Angel and Leslie Maasdorp, unveiled the R3bn to R5bn deal that will see Batho Bonke taking up a 10% stake in the banking group.
But analysts said yesterday the litmus test would be seeing how the benefits of the transaction flow down to historically disadvantaged South Africans. .
Empowerdex CEO Vuyo Jack applauded the deal and said it was "a big, bold step forward for the bank".
"I think the beauty of this structure is the discount up front, which makes sure the option is always in the money as long as the share doesn't go below a certain price. It's well priced and the inherent discount will make it more attractive for funders to come into the financing arrangement," he said.
As it stands, the consortium has to pay R146m for just over 73-million new redeemable preference shares, which come with an option of conversion to cash in the next three to five years.
That gives members of the consortium up to five years to raise the funding needed to pay the option strike price.
It is how the consortium plans to raise the finance that many analysts are questioning.
Jack said third-party financing could be used, but Sexwale, Angel and Maasdorp could use their own balance sheet to come up with some of it.
The question of who will be included in the consortium has still to be addressed. So far, nine regional coordinators have been selected and it will be their job, along with the three promoters, to ensure the consortium is broad enough to live up to the terms of the deal. Maasdorp said selection of the members could not start until the deal with Absa had been concluded.
"When we had the negotiations we could not invite groups in because we had to know what we were offering them," he said. "It's only now that we are able to constitute Newco that we can move forward."
Jack said debt financing could dilute some of the financial benefits of the deal for Absa's new shareholders, but it was still attractive. He said that with business, social, youth and women's groups included, money flowing into the regions could be put to good use to help transform the economies of these areas.
Administratively, the consortium might be difficult to manage, particularly when it came to the allocation of shares, the Empowerdex CEO said.
Apr 08 2004 07:22:57:000AM Stephen Gunnion Business Day 1st Edition
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