Cellular group MTN yesterday announced that negotiations are under way to sell 18.7% of its shares to a staff trust.
De facto owner Transnet has agreed to sell the stake, held by financier JP Morgan via Dutch company Ice Finance BV, to a vehicle called Newshelf 664.
MTN says it has been informed that "the purchaser is a company whose ordinary shares will be indirectly held for the benefit of staff who are currently beneficiaries of the MTN Group share trust". Unnamed financiers are also to benefit from the transaction.
At yesterday`s closing price the deal will be worth more than R3.7 billion, and it is expected to become final on 3 December.
The stake had been warehoused by Ice since January when Transnet and the government entered into an asset-backed financing deal with JP Morgan while it sought a final buyer. The deal was concluded at $425 million or about R5.4 billion at the exchange rate at the time.
Transnet retained all ownership rights over the shares, including dividends and the ability to appoint directors. Both it and Johnnic Holdings, the largest shareholder, have to approve any sale of the shares.
MTN directors could not be drawn to comment on the deal but MTN is seeing it as an opportunity to enhance its black economic empowerment credentials. More than 60% of its employees, the beneficiaries of Newshelf, fall under what the company describes as "equity appointments".
MTN is providing no financial assistance for the sale but says it has appointed a committee of non-executive directors to consider the impact of the deal on the company and the committee has appointed independent legal and financial advisors.
Although government will not be affected by the lower valuation of the stake, it serves as a stark reminder of the state of the telecommunications market ahead of Telkom`s February listing.
Government had been looking for a buyer for the shares for more than a year before closing the deal with JP Morgan and then committed itself to finding a strategic investor to sell to. The Newshelf deal indicates that little international appetite exists for telecommunications shares, even in MTN which yesterday reported a 68% rise in revenue in its interim period.
The deal also follows on the mid-November listing of China Telecom which had its initial public offering delayed and cut in half due to poor institutional demand.
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