Windfall for Newshelf owners
MTN staff receive benefit of six years of risky investment
YEARS OF RISK-TAKING and toil have finally paid off for approximately 3 200 current and previous employees of cellular operator MTN Group: they’ll soon receive a windfall of around 34m shares from the company. The shares are set to be distributed to individual beneficiaries of special purpose vehicle Newshelf 664 (via the Alpine Trust), which has held them since 2002.
Vesting in January 2009, the Newshelf 664 deal has to be one of a few black economic empowerment deals with a happy ending, particularly in the prevailing market climate. It paid an average 1390c/share back in 2002, which has now translated to around R100/ share. The Alpine Trust will deliver almost 8m shares to nine MTN executives, with CE Phuthuma Nhleko being the biggest beneficiary after taking delivery of 2,7m shares currently valued at R270m.
Nhleko owned 8% of Newshelf 664, with colleagues Rob Nisbet and Sifiso Dabengwa each holding around 6%. That entitled them to 1,9m shares each in the distribution. “The participation ratios of the approximately 3 200 beneficiaries of the trust vest over a six-year period, taking into account the completed number of years of employment with MTN during that six-year period,” says MTN.
Alpine Trust chairman Paul Jenkins says a total of 34,389m shares were received and will be distributed to beneficiaries. That equates to 1,8% of MTN’s issued share capital. The rest of the 243,5m MTN shares left in Newshelf 664 will be sold to the Public Investment Corporation (PIC) as part of the original funding mechanism. It has in turn agreed to sell them back to MTN.
In what was for a long time SA’s largest empowerment deal, Newshelf 664 was formed by MTN staff independently of the company, with the purpose of buying MTN shares worth R4,3bn from Transnet Freight Rail. The public corporation was in the process of reducing its 23,7% stake in MTN and had been looking for a foreign buyer when Newshelf 664 pounced. The company raised debt from Transnet itself and the PIC to pay for the shares.
Now that the structure has come to an end Nhleko and colleagues are receiving the shares as a special dividend from Newshelf