MTN Zakhele Futhi, the special-purpose empowerment vehicle of Africa’s largest mobile operator, has raised about R3bn via an accelerated bookbuild of about 23.77-million MTN shares.
The group said on Thursday the shares, representing about 1.26% of MTN’s issued capital, were placed at R128 apiece. That’s a 2.8% discount to the day’s closing price of R131.74 and a 2.8% premium to the 30-day volume-weighted average price of R124.49 by the market close on Wednesday.
MTN shares are MTN Zakhele Futhi’s only material asset, so the share price essentially determines the value of the empowerment vehicle.
MTN Zakhele Futhi said it intends to use the proceeds of the placement to settle its outstanding preference share funding, pay or provide for any applicable taxes, cover unwind costs and distribute the balance of proceeds to shareholders in due course.
The share placement comes 10 months after MTN proposed extending the 2016 MTN broad-based BEE scheme operated through MTN Zakhele Futhi by three years to November 2027.
MTN, like most corporates with such programmes, has term limits in place that are reviewed periodically. Others, such as MultiChoice, have set up their BEE schemes to be open ended with no term limits.
During the extension period MTN Zakhele Futhi’s board will have the discretion to realise or lock in value by partially or fully unwinding the scheme and/or by entering into derivative transactions in respect of the MTN shares held, subject to applicable consents.
MTN may assist in expediting any unwinding of the scheme during the extension period through a specific repurchase of the MTN shares held by the empowerment vehicle, approval for which will be sought from MTN shareholders at the time as part of the approvals for the proposed extension of the scheme.
As a 14.8% ordinary shareholder in the vehicle, MTN may therefore receive some of the proceeds from the placement when MTN Zakhele Futhi distributes the balance of proceeds to shareholders.
FirstRand unit Rand Merchant Bank and Morgan Stanley & Co International acted as joint bookrunners for the placement.
MTN Zakhele Futhi was established as a ring-fenced, special purpose vehicle through which qualifying members of the black public could indirectly invest and hold shares in MTN Group. the vehicle holds about 77-million MTN shares, amounting to about 4% of MTN’s issued share capital.
MTN Zakhele Futhi has provided MTN with a notice setting out an offer of early settlement of the full balance of the notional vendor funding, provided by MTN, in terms of the provisions of the MTN 2016 Tranche 1 subscription and call option agreement entered into between MTN and MTN Zakhele Futhi in August 2016 — known as the NVF Call Option Early Exercise Offer.
the NVF Call Option Early Exercise Offer is exercisable on June 23. MTN has authorised the settlement of the notional vendor funding (NVF) and is accordingly expected to exercise the call option on that date, with settlement occurring on June 27.
Update: June 12 2025
This story contains additional information about the transaction.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.