The transaction will enable PPC to meet the black ownership target needed to convert mining rights.
The main beneficiaries will be PPC's South African employees‚ who will be allocated R733m. Existing strategic black partners and new black women's groups are to be allocated R345m.
With PPC's first-phase broad-based black economic empowerment (BBBEE) transaction for 15.3%‚ announced in 2008‚ this will increase the direct black ownership of the PPC Group to 20.8%.
Taking into account the 80:20 revenue split between the group's South African and international businesses‚ the transaction will result in an effective 26% black ownership of PPC's South African operations and enable the company to meet the mining rights conversion requirements as set out by the Department of Mineral Resources in terms of the Mining Charter‚ it said.
Of the additional shares being issued‚ the major portion - 68% - will be issued to the employees of PPC's South African businesses; 27% of shares will be issued to PPC's existing strategic black partners and 5% to a newly created trust that will focus on black women's groups in areas where the company operates.
The transaction value of approximately R1.1bn is estimated based on the 30-day‚ volume-weighted average price of PPC shares as at Monday July 9‚ of R27.39 per share.
CEO Paul Stuiver said the transaction was structured for the benefit of those parties closest to its business.
"We were particularly keen for our 2‚400 South African employees to participate at a significant level and this transaction will result in them owning approximately 7% of the PPC group‚" he said.
An employee trust has been established to hold the employee shares. All permanent employees of PPC in SA will participate and a portion of shares has been set aside for new employees joining the company during the next three years.
The strategic black partners are the same as those that participated in the first-phase BBBEE transaction in 2008 - Peu‚ Nozala‚ Portland Consortium and Palama Cement Consortium (formerly Capital Edge)‚ which have contributed to the company on a number of fronts during the past four years.
PPC has established the Bafati Investment Trust for the purpose of holding shares for black women's groups in the vicinity of its operations. The board of trustees for this trust will comprise a majority of women.
"This transaction demonstrates our ongoing commitment to transformation and broad-based empowerment in the spirit of the Mining Charter. Additionally it will further enhance our BBBEE credentials‚" Stuiver said.
"We have put this facilitation structure in place in order to ensure a sustainable transaction that maximises share vesting and value transfer to the BEE participants‚" he said.
PPC will cancel 20 million treasury shares prior to implementing this phase of the BBBEE deal. These shares were purchased by PPC in order to mitigate the potential dilution to shareholders during the first phase of the transaction.
The transaction will also allow PPC to streamline its corporate structure by creating separate South African and international operating entities‚ aligning the company's structure with its strategy to expand its footprint in Africa.
At the same time the holding company‚ Pretoria Portland Cement Company Limited‚ will be renamed PPC Limited.
"Aligning our corporate structure with our strategy will result in greater efficiency and better risk management. We were unable to do this prior to converting our South African mining rights‚" Stuiver said.
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