Business Connexion (BCX) will sell a 30% stake to several empowerment partners in a bid to meet the requirements of the Electronic Communications Act - and the long-awaited ICT Charter.
BCX also wants to comply with the Independent Communications of Authority of SA's regulations, which stipulate that companies must be 30% black-owned to qualify for licences.
Based on yesterday's close, when BCX stock ended at R5.55, the deal is worth R437.3 million. After the news yesterday, BCX's share closed slightly down, losing 2c during the day.
Trading up
BCX, currently a level three BEE contributor, aims to move to level two by next year. The empowerment deal will aid it in meeting this objective, it says. According to the Department of Trade and Industry's Codes of Good Practice, level one is the highest attainable level.
In January, BCX said it had moved from being a level four BEE contributor to a level three BEE contributor, a year early. At the time, CFO Vanessa Olver said BCX's next target is to become a level two company in 2011, which could be accelerated by the implementation of a new empowerment deal.
The company yesterday issued a Stock Exchange News Service announcement indicating that the transaction will involve its current empowerment partner Gadlex swapping shares in BCX's subsidiary Business Connexion Pty, in which it holds 20.1%, for shares in the listed company.
In addition, the deal includes executives, management, and organisations involved in social and selected women's organisations. BCX says involving management in the deal is a way of retaining key staff in an industry plagued by skills shortages.
Gadlex will sell its stake in the BCX subsidiary to BCX for R237.5 million, and will then be issued 41 million shares - or 13.5% of BCX stock - at R5.78 a share. BCX will settle a Gadlex loan to the tune of R40 million.
The chosen ones
BCX's other empowerment partners include Ditikeni Investment Company, a broad-based investment holding company. Its 19 shareholders are all non-profit organisations that work in more than 200 poor black communities in SA. It has more than two million beneficiaries across the country.
education.
CIE Investment Company will also invest in BCX. It is a public investment holding company with a focus on contributing to the sustainability of values-based education in South African Catholic schools.
BCX is also including the Community Outreach Program Trust, which is a non-profit organisation that concentrates on establishing sustainable projects in poor communities. It provides weekday pre-primary school care, nutrition and education and weekend adult family education or life skills. It has projects in Gauteng, KwaZulu-Natal and the Eastern Cape.
The women's groups selected as part of the deal include Freewheel Trade and Invest and the YWCA Dube Charitable Trust, which is based in Soweto and is involved in projects that foster education of women and girls.
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