Newshelf, owned by a trust whose beneficiaries are MTN management and staff, has disposed of most of its shareholding in MTN to settle debt.
In terms of an early redemption agreement, Newshelf has disposed of 193.9 million of its 309 million MTN shares to the Public Investment Commissioners (PIC) to settle the debt it owes for the shares.
It acquired the stake, 18.7% of the issued share capital of MTN at the time, in December 2002 and March 2003.
The company will retain a 6.9% stake in MTN.
"This arrangement will significantly reduce financial risk whereby Newshelf`s debt exposure will be reduced substantially to the advantage of the trust`s beneficiaries," says MTN.
"The economic benefit cannot be quantified at this time owing to a number of outstanding obligations with regard to the remaining funding structures as well as other costs and taxes. The Newshelf structure remains a long-term inventive for MTN staff."
Newshelf is distributing 118.7 million shares to the PIC in settlement of B preference shares and B participating preference shares, and is selling it 75.24 million shares to settle C participating preference shares, the beneficiary of which is Transnet.
MTN says the PIC has confirmed it intends to remain a long-term shareholder.
The deal also involves some MTN directors, Phuthuma Nhleko, Robert Nisbet, Sifiso Dabengwa and Irene Charnley, exchanging some of their preferential shares for 276 837 ordinary shares held by the PIC.
According to MTN, the agreement is conditional on the fulfilment of various suspensive conditions, including approvals from Transnet and the PIC.
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