Industrial group Barloworld is
optimistic that qualifying black South Africans will respond positively to its
offer to buy a maximum of 30% of the shares available in a new black-owned
property company, called Khula Sizwe
Property Holdings, being created as part of a larger R3.5-billion
broad-based black economic empowerment (BBBEE) transaction.
The property component of the transaction involves the sale by
Barloworld of 68 mostly industrial properties across South Africa to Khula Sizwe. The
transaction will also be accompanied by a ten-year triple-net lease with
Barloworld South Africa and Barloworld Logistics, escalating at 8% a year.
The property portfolio has been valued independently at R2.9-billion,
but will be sold to Khula Sizwe at a 5% (R143-million) discount, or
R2.7-billion.
The transaction is being funded through a combination of R2.2-billion in
debt, being provided by Nedbank, and R535-million in equity,
R163-million, or 30%, of which has been allocated to the ‘black public scheme’.
The 70% balance will be raised from a management trust (R207-million) and an
employee trust (R174-million).
Group executive of insurance and risk Lesibana Ledwaba says the public scheme opened to qualifying black
South Africans – defined as Africans, Coloureds and Indians – at 9:00 on April
10 and will close at on 16:00 on May 31.
Applications for shares can be completed online, but a call centre and
walk-in facilities have also been established to facilitate subscriptions.
Ledwaba stresses, however, that no racial restrictions have been set for
the equity being acquired by management and employees. About 14 000 Barloworld
employees and management will participate as shareholders in Khula Sizwe.
A maximum of 16 340 000 Khula Sizwe shares, to be issued at R10 apiece,
has been made available for the public offer, with the minimum subscription
amount set at R2 500, or 250 shares.
Tamela Holdings MD Tshepisho
Makofane, who is advising Barloworld on the transaction,
reports that no maximum threshold has been set, but that preference will be
given to smaller subscribers in the event of oversubscription.
All Khula Sizwe shareholders, including those participating in the
public scheme, will be subject to a five-year lock-in period from the
implementation date, currently scheduled to commence on October 1.
Ledwaba says the aim of the transaction is to create a substantial new
black-owned property company, which, following the lock-up period, will be
listed for trade on the BBBEE segment of a stock exchange.
A new independent board and executive team are in the process of being
assembled and a CEO will be appointed ahead of the implementation dated for the
Khula Sizwe transaction.
Besides the property component of the deal, Barloworld has also
announced its intention to issue 3% of its total issued share capital to the
Barloworld Empowerment Foundation Trust, which will support various worthy
causes focusing on poverty alleviation, education and youth development.
Ledwaba and Makofane insist that the foundation is being established in
full compliance with the existing rules governing BBBEE trusts, but have noted recent statements
by the Black Economic Empowerment Commission indicating that some trusts might
not be passing the “ownership test” and could be considered to be “fronting”.
Ledwaba stresses the potential for the foundation to make a positive impact on society. He notes that had the trust been established at the time when Barloworld declared a dividend for the second half of its 2018 financial year, the foundation would have received R20-million in dividend payments for that interim period alone. https://www.engineeringnews.co.za/article/barloworld-optimistic-black-public-will-take-up-offer-to-invest-in-new-property-group-2019-04-25
