| Fri 5 Aug 2005, 11:44 | | Verimark prepares empowerment deal |
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Verimark prepares empowerment deal
August 5, 2005
By Dirk De Vynck
Cape Town - Verimark, the direct marketing and retail distribution company that listed last month, is finalising a black economic empowerment deal for the sale of 10 percent of the company to a broad-based empowerment trust as well as staff.
Michael van Straaten, the co-founder and chief executive of Verimark, said the facilitation of empowerment was one of the reasons for listing the group.
It was originally intended for the deal to be completed before going to the bourse. However, finance arrangements had taken longer than expected and he hoped that the deal would be concluded in about one month`s time.
The empowerment partners would be led by Verimark`s chairman, former National Union of Mineworkers president James Motlatsi.
They included a non-profit organisation of grass roots communities.
Van Straaten could not name the empowerment trust because of the sensitivity surrounding the finalisation of the deal. However, he noted that the benevolent trust was heavily involved with development actions in rural areas, which included schooling and skills development and training.
The trust will hold the lion`s share of the empowerment stake, with Verimark`s black staff holding the rest.
The deal will be done at the listing issue price of R2.50, valuing the empowerment stake at R28.75 million. This was a discount of 14.4 percent on yesterday`s closing price of R2.92, which was 2c lower on the day.
The general retailers sector gained 0.21 percent yesterday.
After the transaction, Van Straaten will have 51 percent of the company, the empowerment partners 10 percent, the management 4 percent, institutions 18 percent and the public 17 percent.
Van Straaten said he had also made up to 5 percent of his own shareholding available as part of a scheme to further incentivise management, which would be introduced within the next year. This would water down his own shareholding to 46 percent.
Verimark, which has been operating since 1977, has become a household name through its flighting of television commercials for products such as Bauer Pro cookware, the Genesis vacuum and steam cleaning system, Diamond Guard car polish, the Twista Pro food processor and the Aero Max body exercise system.
The company has forecast growth in turnover of about 17 percent to R330 million for the year to February 2006, while net profit after tax is set to gain 33 percent to R38.6 million.
`We feel comfortable in reaching our forecast turnover and profit,` Van Straaten said.
Growth was set to come from new products in existing as well as new product categories. Far more products were introduced each year than discontinued and at present Verimark had just over 30 products.
Verimark would also expand through the store growth of the retail partners in which it has a presence, including Dion, Game and Checkers Hyper.
It was also looking at entering new retail groups that matched its product range. The longer-term focus was on international expansion, which would be facilitated through joint ventures with established overseas companies
