Transnet explains R5bn MTN share sale

Johannesburg, 10 Jul 2006

Transnet`s recent disposal of its stake in MTN raised R4.92 billion, not the previously-reported R4 billion, and was done to "reduce the risk of having too large a proportion of total assets in one stock".

This is according to John Dludlu, the state transport utility`s GM of communications, who says: "We got out at top of market - the sale was inspired by a robust performance of the MTN stock."

Of the 82 million shares, which were sold at R60 a share, about 76 million were held by the M-Cell Trust, on behalf of one of Transnet`s pension funds - the Second Defined Benefit Fund.

The fund, explains Dludlu, is the capital beneficiary of the trust. The other six million shares were held directly by Transnet.

It is understood the proceeds will remain in the possession of the pension fund, with no talks surfacing about re-investment in another company.

"The fund is now in a position to appropriately allocate its assets between equity and bonds," says Dludlu.

Following the release of Transnet`s financial results last week, CEO Maria Ramos said she was pleased the company`s policy to disinvest from non-core assets was beginning to pay off, as Transnet saw a 7% rise in revenue to R26.3 billion for the financial year to end-March 2006.

However, net profit declined from R7.2 billion to R4.4 billion over the period.