- Equity transaction benefits PPC employees
- Trust acquisition enhances B-BBEE status
- Transaction closes, empowering qualifying employees
Harare- PPC, a leading company in the cement and materials industry, has announced the successful completion of an equity transaction that aims to benefit qualifying employees working for its subsidiaries in South Africa. The transaction involved the establishment of a PPC Employee Share Ownership Trust (the Trust), which acquired 10% of PPC South Africa Holdings' share capital from PPC for a purchase price of R380 million.
The primary objective of the Trust is to recognize and reward employees for their valuable contributions to PPC's success, while also demonstrating the company's commitment to achieving equity ownership targets in South Africa.
Eligible employees who are not currently participating in PPC's long-term incentive program will have the opportunity to participate in the Trust, with a particular focus on historically disadvantaged individuals in alignment with Broad-based Black Economic Empowerment (B-BBEE) principles. The Trust has been designed to provide ongoing benefits to qualifying employees throughout their employment and replaces previous equity ownership schemes that have been unwound.
Through this transaction, PPC aims to enhance its B-BBEE status and expects an improvement in its rating to level 1.
Roland van Wijnen, the Group CEO, expressed his satisfaction with the transaction, emphasizing that it provides a meaningful way for employees who do not participate in PPC's long-term incentive plan to share in the creation of shareholder value.
In addition to the equity transaction, PPC SA Holdings, which encompasses PPC's cement and materials businesses in South Africa, will also take over PPC's shareholding in PPC Group Services (referred to as the Founder or Group Services). PPC Group Services is a company that provides administrative, information technology, and treasury services to the South African group.
The Trust's acquisition of the Trust Shares, valued at R380 million, will be fully satisfied through a loan provided by PPC. The loan accrues interest at the South African prime rate and does not have a specified final repayment date. Repayment of the loan will be facilitated through future dividends declared by PPC SA Holdings, of which the Trust will be entitled to 10%. Of the dividends received, 25% will be distributed to qualifying beneficiaries, while 75% will be allocated to PPC to repay the loan after deduction of any applicable tax.
Until the loan, including capitalized interest, is fully repaid, qualifying beneficiaries will receive 2.5% of any dividends declared by PPC SA Holdings. Once the loan is repaid in full, qualifying employees will receive 10% of the dividends declared by PPC SA Holdings. The costs of operating the Trust will be covered by the Founder.
The Transaction agreements were executed on August 4, 2023, and all the conditions precedent have been met. Therefore, the Transaction is set to close on the same date in accordance with the terms of the agreements. The Transaction agreements include standard reciprocal warranties by PPC, PPC SA Holdings, and the Trust, as well as additional warranties by PPC concerning ownership of the Trust Shares.
As of March 31, 2023, PPC SA Holdings had net assets amounting to R3.772 million, based on the latest audited company financial statements. For the financial year ended March 31, 2023, PPC SA Holdings incurred a net loss after tax of R552,343. On the other hand, Group Services had net liabilities of R286 million as of March 31, 2023, and recorded a loss after tax of R20 million for the same year.
PPC will continue to consolidate 100% of PPC SA Holdings, and the 2.5% of dividends received by qualifying employees will be disclosed as an additional salary expense in the relevant South African legal entity. The Transaction will not impact the gross debt of the consolidated South African operations.
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