Cape Town-based technology infrastructure provider CCI has sold 51% of its shares to black employees in a R6 million deal.
The deal was facilitated by former shareholders who agreed to payment at a later stage, says the company, because banks felt it was "too small a deal" to finance.
CCI MD Steve Pinkey says most of his company`s clients are large corporations and parastatals. "We realised several years ago that we had to be empowered or lose out. We`re proud of the deal we`ve struck, which rewards our long-term employees with a stake in the company."
Five previously disadvantaged individuals (PDIs), selected on the grounds of seniority and length of service, have taken up shareholdings of between 4% and 15% each in the deal, which has been backdated to 1 June 2003.
A further 15.12% has been placed in a staff trust to benefit the remaining employees. CCI has 41 permanent staff in total, of whom 71% are black. Former minority shareholders have supported the deal by selling their 51% shareholding and are to be repaid out of future dividend flows to the new shareholders.
"The willingness of the former shareholders effectively to finance the deal was important to its success," Pinkey says. "At R6 million, the deal, although very significant to us, was too small for any of the financial institutions to look at. Most of them only start getting interested if the deal is worth R200 million or more. This is going to be a huge constraint for other medium-sized IT companies wanting to do empowerment deals."
However, he says the road to empowerment was far from smooth. "We made two or three abortive attempts at a deal between 2001 and 2003," says Pinkey. "Lots of people came to us promising the world, but all proved to have nothing substantial behind them. Eventually we realised we had a great partner in our own staff and didn`t need to go outside."
The final deal was negotiated with staff and CCI`s trade union, the SA Equity Workers Association, which has given the deal its blessing.
CCI says its empowerment is not limited to the ownership level, and addresses all elements of the BEE scorecard. Three of the new shareholders now sit on the six-member board. Of top managers, 50% are black (up from zero in 1994) and 66% of junior and middle managers are black. Of the 41-strong workforce, 80% are PDIs (including women) compared to 45% in 1994.
CCI, which specialises in physical cabling infrastructure, makes about 80% of all its purchases from black-owned suppliers and subcontractors, many of which were set up and funded by the company, and provide it with additional resources to service its clients.
The company also has a staff training and scholarship policy that includes informal apprenticeships, internal training and industry courses. Over 70% of the company`s annual training budget is spent on external courses aimed at transferring skills to PDI staff.
"Thanks to this deal, we`ve shored up relationships with our existing clients and opened doors to several new clients. We couldn`t be better positioned to face the challenges of the next few years," Pinkey says.
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