MTN Zakhele Futhi

24-AUG-16

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!




The SAB & AB InBev merger is one step closer to being completed, albeit a bit harder going forward. A UK court yesterday ruled that the Altria and BEVCO shareholders(they own a combined 41% of SAB Miller) will be treated as a separate shareholder class when it comes time to voting on the merger. Removing Altria and BEVCO from the vote means it will be a bit harder for the merger to go through. Basically of the remaining 59% shareholders, 75% need to vote in favour of the merger for it to happen. Given that the SAB Miller share price is still around the 44 Pound mark, it tells you that the market thinks this will go through. D-Day or vote day will be the 28 September.