Cape Times

PPC shares slump on back of BBBEE announceme­nt

- Roy Cokayne

SHARES in PPC slumped by 3.71 percent after the listed cement and lime producer announced amendments to its broad-based black economic empowermen­t (BBBEE) transactio­n and a proposed framework for a new empowermen­t transactio­n.

The amendments and new framework are aimed at ensuring PPC achieves a higher BBBEE shareholdi­ng.

PPC shares closed at R5.71 on Friday after closing at R5.93 on Thursday.

Sibonginko­si Nyanga, an analyst at Momentum SP Reid Securities, said if PPC did not embark on a new BEE scheme and once its certificat­e expired in December, its empowermen­t rating would probably drop to level 7 under the revised Trade and Industry Department BBBEE codes of good practice.

Nyanga said PPC’s current BBBEE transactio­n had also run into sustainabi­lity problems because it had relied heavily on a positive trajectory in PPC’s share price, but due to weak market conditions PPC’s share price had been under sustained pressure.

PPC’s existing BBBEE transactio­n dates back to December 2008. It involved four strategic black partners (SBP) – women’s empowermen­t group Nozala, black-owned and managed Peu, empowermen­t investment firm iLima Portland Consortium and broad-based group Capital Edge Cement Consortium – and two community services groups (CSG).

Agreements Explaining the rationale for the amendments and new framework, PPC said the 2008 BBBEE transactio­n was implemente­d prior to the impact of the global financial crisis on South Africa.

PPC and the SBP and CSG have agreed that on December 16, the final date of the transactio­n, PPC will repurchase the initial subscripti­on shares as originally contemplat­ed.

However, the SBP and CSG will be obliged to only subscribe at the compulsory price of R66.84 for the number of PPC shares that was equal to the cash they each had available at that date instead of the same number of PPC share as their initial share subscripti­on.

They had also agreed in a separate transactio­n and as part fulfilment of the broader objectives of the mining charter, that PPC would issue additional PPC shares equivalent to 30 percent of the original number of shares acquired by the SBP and 8.93 percent of the CSG original subscripti­on for 1 cents a share, which would be subject to a 12-month lock-in period.

Newspapers in English

Newspapers from South Africa