Group Five to amend its BEE transaction

Group Five says proposed amendments to its existing black economic empowerment transaction will see Mvelaphanda Group dispose of its holding in the construction and engineering company in favour of two new trusts.

It says the transfer of Mvelaphanda shares‚ subject to shareholder approvals‚ and representing 11.16% of Group Five‚ to the Black Professionals Staff Trust and the Izakhiwo Imfundo Trust will lead to a small improvement in its empowerment credentials. Both trusts will be established later this year.

The group first introduced direct black ownership in 2005‚ comprising a broad-based employee scheme‚ a black management scheme‚ and the iLima and Mvelaphanda empowerment transactions‚ which jointly accounted for 21.6% of shares in issue at the time.

The iLima transaction was subsequently unwound‚ and along with the winding up of the broad-based employee scheme‚ and the impending expiry of the black management scheme‚ Group Five is reviewing its broad-based black economic empowerment (B-BBEE) ownership status.

“All that’s happening now is that the balance owned by Mvelaphanda is being replaced by the trusts‚” Mike Upton‚ group CEO said on Tuesday.

Group Five said Mvelaphanda had committed itself to realising the value of assets for its shareholders‚ including its interest in the listed construction company.

Mvelaphanda would sell Group Five shares held by its wholly-owned subsidiary Lexshell 650 Investments for purposes of the amended empowerment transaction.

Upton said this would provide Group Five with a small increase in its black ownership‚ while showing “a positive improvement” on its B-BBEE score card.

“Group Five believes its employees‚ particularly its professional staff are key to its success and future growth‚” the company said in a statement on Tuesday.

“[It] further believes that the introduction of the Black Professionals Staff Trust into its shareholder body ... will entrench a sense of ownership amongst the ... beneficiaries‚ as well as assist Group Five in the incentivisation and retention of such employees.”

The main objective of the Izakhiwo Imfundo Trust was to provide scholarships‚ bursaries and awards in fields of study aligned to the construction industry.

The group said the new empowerment transaction would bring “minimal additional dilution to existing shareholders”.

"I don't think this will cause consternation among shareholders as the additional two million shares [to be issued to Izakhiwo Imfundo Trust] are 2.1% of the current weighted shares in issue‚" Imara SP Reid analyst‚ Sibonginkosi Nyanga‚ said on Tuesday.

He also said the new deals were not as dilutionary as the original empowerment deals.