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MTN Group came out with an interesting announcement that a lot of people have been waiting for with bated breath. To those who do not know what I am talking about, I am referring to the announcement of the new BBBEE scheme now going to be referred to as 'MTN Zakhele Futhi'.
Zakhele = Build it yourself
Futhi = Again
Quick recap on the 'MTN Zakhele (old scheme) deal. This is the scheme that was put together in 2010 and is listed on the JSE's BEE board under telecoms. It holds up to 4% of MTN Group. This scheme is coming to maturity at the end of November and management is in the process of unwinding this scheme. In the process of unwinding current investors have three options:
i) Cash
ii) A mixture of Cash and Ordinary MTN shares
iii) A re-investment option which will allow you to roll over your "MTN Zakhele" (old scheme) into the 'MTN Zakhele Futhi' (new scheme)
In 2010 the shares were offered at R20 per share and according to the SENS announcement management is estimating a fair value of R75.52 after all costs relating to unwinding the structure and paying off all the debt related to it. This is a return of almost 4 fold, yes 4 fold!!! One of my favourite BBBEE specialists uses the phrase "it's better than a kick to the face." I think here he's referring to the fact that the MTN Group has not done all that well compared to the BEE scheme in the same time frame, non the less great returns for black shareholders.
MTN Zakhele Futhi
The new MTN Zakhele Futhi (new scheme) has an implied value of R9.9 billion and will soon be open to the public. Qualifying people will be able to invest in these shares. Please get involved, ask questions (ask me Bright Khumalo) and most importantly INVEST your hard earned savings and let it work for you. If you own the MTN Zakhele (old scheme) and you are not sure which option to pick, or you don't know what it all means, again please bombard me with your questions!
The old and the new scheme together will contribute to an effective indirect "see-through" black ownership of over 30% of MTN's South African operations. Now we wait for the prospectus which will outline amongst other things what price the MTN Zakhele Futhi (new scheme) will be offered at. All we know right now is that MTN is going to sponsor this deal giving the potential BEE shareholders a 20% discount on purchase, very generous management!