COMPANIES
Comair in R100m BEE deal
Posted Wed, 26 Jul 2006
Aviation company Comair announced an empowerment transaction involving 16.1 percent of its shares with the Thelo Aviation Consortium on Tuesday.
"Comair has selected a broad-based black investment company, Thelo Group, as its partner in the R100-million transaction," said the company which operates as British Airways Domestic and Regional, and kulula.com.
The shareholding will be structured via a combination of a cash purchase of shares and a vendor-facilitated share issue — 15 percent being issued to the consortium as a new class of A shares (with voting rights) and 1.1 percent in Comair ordinary shares bought by the consortium for cash.
Comair will issue 75 million new A shares to the consortium at a par value of one cent each with its own funding of R750 000.
The statement quoted Comair joint-chief executive Gidon Novick as saying: "In searching for a partner, we focused on finding a group that has capital, skills and time to devote to
the business. It was also important for us that a BEE (black economic empowerment) transaction should be as broad-based as possible, bringing in new, dynamic players rather than the same faces over and over again."
His counterpart Erik Venter said: "We have found the best partners. Not only do they meet our initial criteria, but they have been willing to share the value with a diverse group of investors that are very involved with social upliftment in our country.
"This deal will pave the way for us to further advance our leadership position in the industry and also grow into new markets."
Ronnie Ntuli, chairperson of the Thelo Group, which leads the consortium with 73 percent of the new shares said: "The aviation industry in particular is well poised to benefit from South Africa and Africa's growing middle-class and the further development of tourism, particularly with South Africa's hosting of the 2010 World
Cup Soccer."
The statement explained
that the difference between the equivalent market value per Comair share and the par value to be paid by the consortium represents an initial "hurdle balance".
The A shares will not be entitled to dividends until the "hurdle balance" reaches zero, but will be equal to ordinary shares in all other aspects, including voting.
The hurdle balance will increase annually by an escalation factor, estimated at ten percent initially, and be reduced by the amount of dividends paid by Comair on the equivalent ordinary shares.
The escalation factor can be reduced by achieving certain performance targets, as agreed with Comair.
"At the end of eight years Comair will have the right to repurchase the A shares at par value according to the ratio of the outstanding hurdle balance to the share price at such time, and the A shares remaining with the Consortium will be converted into ordinary shares on a one-for-one basis," the company continued.
The
transaction is subject to shareholder approval and the subsequent approval of the JSE.
The Thelo Group was founded in late 2005 by Ntuli, former chief executive of Andisa Capital and Craig Lyons, former head of Mvelaphanda Strategic Investments and is the lead partner in the consortium.
It is a partnership between two South African individual investors (90 percent) and an international strategic investor (10 percent).
Other consortium members are: Lefa Group Holdings (13 percent), and investment company led by Khutso Mampeule, currently a non-executive director of Comair. Mampeule is the CEO of the South African Post Office and holds several board positions in listed and unlisted companies.
Golden Dividend 322 known as "Chakaza" (six percent) is a women's empowerment company founded by four black professionals with financial and legal backgrounds. The company is 100 percent owned by black women.
DEC Investment Holding Company — "DIHC"
(four percent) — is a wholly-owned subsidiary of the Disability Empowerment Concerns Trust, which was established in 1996 by seven major South African national non-governmental organisations representing people with disabilities to engage in business ventures.
White Sail Investments (Pty) Ltd — "The Thabo Mbeki Education Trust" (four percent) was established as a fund that supports financially disadvantaged students in technology and economics.
Sapa
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