Mobile network operator MTN is winding up the Newshelf 664 transaction, in which more than 457 million shares will change hands between the group, the shell company and the Public Investment Corporation (PIC).
Newshelf 664 is a shell company originally set up to warehouse a 23.7% stake in MTN that was owned by state-owned enterprise Transnet.
Government had originally sought a private buyer for the shares; however, this did not happen, and MTN management and staff resolved to buy the shares themselves for a nominal stake.
The shares were held in trust for about 2 400 permanent staff and senior management. The deal was originally funded in three tranches: R690 million through bank debt; R1.5 billion through a Transnet guaranteed bond; and R2.1 billion through the PIC - the organisation that manages most of government's pensions.
MTN's Stock Exchange News Service announcement yesterday stated all conditions precedent had been met for the acquisition of the Newshelf 664 shares from the Alpine Trust. It said funding obligations due to the PIC had been met, and MTN would now repurchase 243 500 011 shares held by Newshelf 664.
The final part of the transaction, which happened yesterday, saw MTN issue an aggregate 213 866 898 new shares to the PIC and listed on the Johannesburg Stock Exchange. In turn, MTN repurchased 243 500 011 shares owned by Newshelf 664, which were cancelled and delisted from the stock exchange.
Controversy had surrounded the scheme as senior management is set to benefit from a 70% allocation of the shares, with employees receiving the minor portion. The shares were not tradable over the six-year funding period. Most of those benefitting are from historically-disadvantaged backgrounds.
“Good for those who benefitted because they self-funded the purchase of the shares at exorbitant rates from the PIC. They took the risk and deserve to have made some money out of them,” says Investec Asset Management analyst Rob Forsythe.
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