MTN Zakhele Futhi, the special purpose empowerment vehicle of Africa’s largest mobile operator, has been given the green light to move forward with a R2.5bn payout to its investors, the latest in a flurry of action to unwind the scheme.
In a note to investors on Tuesday, MTN Zakhele Futhi said it was pleased “to announce that it has obtained confirmation that exchange control approval for the declaration and payment of the special distribution from the financial surveillance department of the SA Reserve Bank is not required and, accordingly, this condition is no longer applicable and the special distribution is unconditional”.
The payout is according to 123,416,826 ordinary MTN Zakhele Futhi shares in issues, priced as R20 each, translating to R2.468bn. This comes almost a month after it raised about R3bn via an accelerated bookbuild of about 23.77-million MTN shares.
The share placement came 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.
“The history is MTNZF has been the empowerment vehicle that has supported our transformation as a company for the last eight years plus, Ralph Mupita,” group CEO at MTN recently said in a leaked podcast to staff.
During the extension period MTN Zakhele Futhi’s board will have discretion to realise or lock in value either by partially or fully unwinding the scheme or by entering into derivative transactions in respect of the MTN shares held, subject to applicable consents.
After the payment of the special distribution, it will determine the best method to finalise the unwind of the scheme and return the residual net asset value of the scheme. This is estimated to be R246.8m-R370.3m, which translates to R2-R3 per MTN Zakhele Futhi ordinary share.
The amount of the residual value will depend mainly on the price at which the remaining 2,476,448 MTN ordinary shares held by the scheme will be disposed of in the market in due course. Once done, MTN Zakhele Futhi will delist from the JSE, wind up and deregister.
MTN Zakhele Futhi board chair Belinda Mapongwana said: “We are pleased that the scheme has now delivered a full return of capital and a modest gain to shareholders, despite the volatility we’ve seen in the market over the years.”
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