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TKG - Telkom SA Limited - Statement by Vodacom
Telkom SA Limited
(Registration number 1991/005476/06)
JSE and NYSE Share code TKG
ISIN ZAE000044897
("Telkom")
Statement by Vodacom
Shareholders are referred to the following statement issued today by Vodacom
Group (Pty) Limited ("Vodacom"), a joint venture where Telkom holds a 50%
interest:
Vodacom Proposed broadbased BEE transaction with significant public offer
"Our BEE transaction is well on track. It will be broad-based including our
staff, the public and strategic partners who contribute meaningfully to our
business. We expect to announce the full details of the transaction in the third
quarter of this year." Alan Knott-Craig - Chief Executive Officer, Vodacom.
Vodacom, as the leading cellular company in South Africa and a major participant
in the South African economy, supported by its shareholders Vodafone and Telkom,
welcomes the role that it can play in helping to meet the country`s socio-
economic objectives in ways that are sustainable, credible and of benefit to all
its stakeholders and to the country as a whole. Vodacom regards transformation
as fundamental to the long term development and stability of the South African
economy and Vodacom`s business.
Vodacom and its shareholders, together with Rand Merchant Bank, a division of
FirstRand Bank Limited ("RMB") are in the process of structuring a unique and
complex Black Economic Empowerment transaction ("BEE transaction"), which will
be implemented as part of Vodacom`s committed efforts to achieve the objectives
set out in the Department of Trade & Industry`s Broad-Based Black Economic
Empowerment Codes of Good Practice ("DTI Codes") and the draft Information and
Communications Technology Charter. This announcement updates interested parties
on the progress of the BEE transaction.
In line with Vodacom`s commitment to transformation, the BEE transaction is
designed to provide long term, sustainable benefits to a broad base of South
African participants.
Detailed terms of the BEE transaction are in the process of being finalised. The
BEE transaction will include a significant offer to previously disadvantaged
individuals and groups. The key features of the BEE transaction include, inter
alia:
* transaction size of R7.5 billion;
* implemented at the Vodacom South Africa (Proprietary) Limited ("VSA")
subsidiary level;
* participants will include Vodacom`s South African staff (25%), the black
South African public and VSA business partners referred to as Public
participants, and strategic shareholders (including established broad-based
BEE groupings) referred to as Strategic participants and collectively
referred to as the BEE participants; and
* notional vendor funding structure.
1 Details of the proposed BEE transaction
1.1 Rationale and principles for the BEE transaction
In line with Vodacom`s empowerment objectives, this BEE transaction has been
designed to provide long term benefits to a broad group of black South Africans,
with a focus on lower income groups. In order to structure the BEE transaction
efficiently, Vodacom will be guided primarily by the following principles:
* enhance commitment to empowerment and transform the company`s equity
ownership in order to reflect the demographics of South Africa through the
establishment of a broad-based and inclusive empowerment shareholding;
* broadening ownership in Vodacom amongst its employees;
* achieve maximum compliance with DTI Codes;
* aim to align equity ownership with contribution to the company;
* ensure long-term commitment from the BEE participants to Vodacom;
* preserve shareholder value;
* reach out to needy communities and designated groups; and
* ensure good corporate citizenship.
1.2 BEE participants
Vodacom, its shareholders, and RMB are currently running a robust and objective
partner selection process ("partner selection process") to determine the
composition of the BEE participants. Final negotiations have not commenced with
any particular party or parties.
1.2.1 Public participants
All black South African citizens (as ascribed in Code 000 of the DTI Codes) and
black-owned entities will be eligible to participate in the BEE transaction
through a public share offer. Vodacom believes that participation from the
broader public is particularly relevant given its high public profile. In
addition, public participation is in line with current best practice followed by
leading South African companies.
1.2.2 Strategic participants
This participant grouping will play an important role in furthering Vodacom`s
transformation, skills and capacity building programmes. Vodacom has commenced
with the partner selection process regarding the selection of the preferred
1.2.3 strategic shareholders.
The short listed parties have been provided with an indicative term sheet, which
will allow them to indicate their ability to participate in the BEE transaction
on the terms set out therein.
Based on the submissions received from short listed parties, Vodacom will
determine the composition of the Strategic participants and enter into
negotiations with such parties. No further submissions will be considered and a
final decision has not been made.
Staff
The inclusion of this participant grouping is intended to ensure the
sustainability and growth prospects of Vodacom and to spread a significant
portion of the benefit of the BEE transaction amongst all Vodacom`s South
African employees. Employee participation is seen as integral to Vodacom`s
objective of ensuring the sustained success of the business and enhancing
Vodacom`s track record of retaining and developing their employees.
Vodacom South African employees will participate in 25% of the BEE transaction
through an employee share ownership plan ("ESOP").
2 Structure and financing of the BEE transaction
In order to facilitate the financing of the BEE transaction and to ensure sound
governance of such funding arrangements, a number of investment entities will be
established. These entities will hold the interests of BEE participant groupings
in the issued share capital of VSA. The BEE participants will, from inception,
have economic rights associated with the respective investment entities`
interests in the issued share capital of VSA.
The BEE transaction will be financed through an optimal combination of equity
and substantial facilitation from Vodacom through vendor funding. The Public
participants and Strategic participants will be required to provide a level of
unencumbered equity, which will be supported by appropriate Vodacom
facilitation. The ESOP will be funded entirely through Vodacom facilitation.
BEE participants will be subject to restraint principles in line with market
norms.
3 Process and timeline
A further announcement will be made during the third quarter of 2008 after
negotiations with Strategic participants have been finalised. This announcement
will provide the detailed terms of the BEE transaction, including the structure
of the BEE transaction, terms of the public offer, information on the Strategic
participants, and expected economic costs of the BEE transaction. Implementation
of the BEE transaction is expected in the fourth quarter of 2008.
Issued by: On Behalf of:
Dot Field Alan Knott-Craig
Chief Communications Officer Chief Executive Officer
Vodacom Group (Pty) Ltd Vodacom Group (Pty) Ltd
Cell: +27829900174
E-mail: dot.field@vodacom.co.za
Date: 10/03/2008 15:29:44 Supplied by www.sharenet.co.za
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