Mineworkers Investment Company (MIC) has acquired a 25% stake in the document management specialist company, Metrofile, from holding company MGX.
The black empowerment equity deal was concluded with the full approval of MGX shareholders, the Metrofile board, and its consortium of banks, was announced in Johannesburg on 21 October and is immediately effective.
MIC, a broad-based investment company, is wholly owned by the Mineworkers Investment Trust benefiting mineworkers, energy and construction workers and their dependants through social investment programmes. With its acquisition of a 25% direct interest in Metrofile, two senior MIC executives have been appointed to the Metrofile board: Paul Nkuna, CEO of MIC, has been appointed non-executive chairman, and Keshan Pillay, executive director of MIC, has been appointed non-executive director.
Nkuna says: "The transaction with Metrofile and its holding company MGX represents another strategic investment by MIC into a new industry sector. In line with our investment philosophy, it will be our intention to gradually build up our investment profile in Metrofile and the sector over a period of time, incorporating not only the financial aspects but also other BEE objectives, including skills development, employment equity and affirmative procurement. We are looking forward to being part of the Metrofile team and its future growth."
Metrofile first has to repay R350 million to its creditors, or increase the value of the business to greater than R350 million, before any value will accrue to MIC or MGX. This debt arises from the restructuring of MGX.
As the R350 million may be equal to or greater than the current value, the Metrofile shares were able to be sold at a nominal rate to MIC, which will have to work with Metrofile and MGX to enhance Metrofile`s value in excess of its debt before these shares have any value. MGX will retain a 75% stake in the business.
"It is a good transaction for both parties as the deal did not need outside funding and is not geared in any way for us," says MIC`s Pillay. "Investment transactions like this are always value-enhancing to both parties."
"We have been in discussions with MIC since the beginning of the year," says Metrofile CEO Graham Wackrill. "From MGX`s perspective we believe that the reduced stake will yield greater value than the present full stake. MIC will play a major role in enabling Metrofile to retain and grow its existing business, and particularly in securing new business in the public and private sector."
Wackrill says the deal opens new markets for Metrofile. "We have not been able to make a play for much parastatal or government business because of our lack of empowerment. With MIC on board, we will now have the ability to present our products and services to government."
MIC will also be actively involved in assisting Metrofile internally from a transformation point of view, and will contribute its expertise in skills development, procurement and social responsibility.
Metrofile has been courted by a number of entities over the past two years but, says Wackrill, MIC`s approach has been one of true partnership and the two companies are a good fit. "Furthermore, we see this as a true empowerment deal as MIC is broad-based. We have always believed in contributing to the promotion of black economic empowerment and Metrofile has come a long way down the equity track on its own. With MIC we can now move to the next level."
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