Johnnic Holdings and parastatal Transnet yesterday announced the conclusion of a voting pool agreement on their respective stakes in M-Cell, the parent company of mobile operator MTN.
Transnet effectively sold its stake in M-Cell to Dutch financing company Ice Finance BV in January through an asset-backed financing deal, but it retained the voting rights and the ability to appoint directors linked to its 20% shareholding. Transnet is to identify a final buyer for the stake within the next 16 months; both Transnet and Johnnic must approve any sale by Ice Finance of the shares.
In terms of the new voting agreement, Johnnic will retain control over M-Cell and appoint the majority of its board, but Transnet will throw its weight behind Johnnic on major M-Cell transactions. "The transaction strengthens Johnnic`s existing control over M-Cell," says Johnnic COO Jacob Modise.
According to the companies "each party will have pre-emptive rights over a substantial portion of the other`s shareholding in M-Cell", leaving the door open for Johnnic to buy the Transnet stake. At the time of the Ice Finance deal, government said it still intended to find a buyer by way of a competitive bidding process.
Should Johnnic choose not to buy the stake, or be unable to raise the $475 million it was valued at in January, Transnet is confident the voting pool agreement will not deter other investors.
"We were careful to ensure that the conclusion of the voting pool in no way inhibits Transnet and Ice Finance BV`s ability to sell their M-Cell shares," says Transnet CEO Mafika Mkwanazi. "A purchaser of Transnet`s interest in M-Cell will therefore not be bound to become a party to this agreement, although there may be significant benefits to them to participating in it."
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