Net 1 UEPS Technologies has agreed to sell 4.4 million of its shares to two black economic empowerment (BEE) partners, at R60 each, in a deal worth R264 million.
The group says the shares will be issued at 75% of the value of the stock price at close on 6 December. Its share price closed 2.5% higher yesterday on the back of the news, at R82, giving it a market capitalisation of R4.8 billion.
Of the 4.4 million shares to be issued, 4.1 million will go to Business Venture Investments 1 567, and the balance to Born Free Investments 272. No information was provided about Net 1's new empowerment partners.
Net 1 explains it will lend its new partners funds, at a market-related interest rate, so they can purchase the stock. The loan, which will be secured by the shares, must be repaid over five years.
Driving growth
Chairman and CEO Serge Belamant says the deal will "lay the foundation for a long-term sustainable business in SA, together with the addition of BEE partners, who we expect to be actively engaged in identifying and driving new growth opportunities for the company".
Its deal follows a February announcement in which it explained a probe by US authorities into its social welfare payment contract had led to its BEE partners not taking up stock options, because its share price had fallen dramatically.
The US Securities and Exchange Commission and Department of Justice's Criminal Division was investigating whether there was bribery involved in the R10 billion contract with the South African Social Security Agency (SASSA). The outcome of that probe has yet to be announced.
However, the Constitutional Court ruled at the end of last month that the contract was invalid. It "suspended its declaration of invalidity pending determination of a just and equitable remedy", said Net 1 in a statement.
Losing bidder AllPay, a unit of big four bank Absa, turned to the Constitutional Court in yet another attempt to have the multibillion-rand tender process declared invalid. The tender was awarded to Net 1 unit Cash Paymaster Services (CPS). Both CPS and SASSA opposed AllPay's application.
AllPay argued the five-year deal, to service around 15 million grant recipients, was not awarded lawfully. AllPay's action followed its loss in the Supreme Court of Appeal, which is where the matter was heard after the North Gauteng High Court ruled that, while the deal was illegal and invalid, it would remain in place so that payments could continue.
There will be a hearing on 11 February to arrive at a solution. Net 1 and SASSA have been ordered to pay AllPay's costs.
Net 1 inked its initial BEE deal in 2012 and granted the consortium an option to purchase 8.96 million shares at a price of $8.96 per share, which expired on 17 April.
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