This transaction follows the successful implementation of its phase-one staff empowerment transaction in 2005, valued at R729m, through which the group's black management and staff acquired a 4% stake in the company.
Tiger Brands CEO Peter Matlare said that after the success of phase one, which focused only on the internal staff, it was time for the company to have broader interests.
“Tiger Brands is firmly committed to black economic empowerment (BEE). Its intention in implementing this transaction is not only to comply with BEE codes, but to establish a sustainable social investment that will make a difference in the lives of our employees, their families and many disadvantaged South Africans,” he said.
Tiger Brands, in this transaction, had set out to ensure that the structure of the deal was broad based and benefited mainly black South African stakeholders.
The Thusani Trust, employees and the newly formed Tiger Brands Foundation, will be allocated 8% of the shares and the remaining 2% will be equally allocated between the group's strategic black partners, Brimstone Investment Corporation and Mapitso Consortium Investments.
“This is part of Tiger Brands' continuity to deliver on its commitment,” said Matlare.
Participating employees would not be required to make any cash or other investment towards their participation, and the two strategic black partners would be required to make a 5% cash investment as part of their subscription for their Tiger Brands shares. Unlike the staff empowerment transaction, the phase-two transaction would be fully vendor-financed by Tiger Brands, except for the 5% equity contribution of the black partners.
Matlare said Tiger Brands opted for internal financing because it thought it was an efficient way of doing things and to ensure that the transaction worked for the company and its beneficiaries. He said that in terms of empowerment, Tiger Brands' total black ownership would rise to 30% if mandated investments and foreign investments were excluded, “which is not a bad place to be at this stage”. One of the beneficiaries, the Thusani Trust, focuses on funding the tertiary education of families of qualifying black employees, while the Tiger Brands Foundation was established for the feeding and education enhancement programmes at non-fee-paying schools in selected regions and communities.
“As a leading, branded fast moving consumer packaged-goods company, the foundation presents us with an opportunity to impact on broader challenges of poverty, hunger and malnutrition at the schooling level as we partner with targeted schools around the country,” Matlare said.
Meanwhile, the schemes for the general staff and the black managers' trust have been established for employees to benefit from the future long-term growth of the group.
Matlare said that in terms of the general staff scheme, eligible staff would be given 100 shares each with a lock-in period of five years. The two strategic black partners would each hold 1,813,613 of Tiger Brands' ordinary shares, tradable only after eight years.
Mapitso Consortium Investments consists of experienced business people who have a strong existing relationship with Tiger Brands through their present and former status as nonexecutive directors. Brimstone has had a successful empowerment relationship with the group since 1995.
Source: Business Day
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