PRETORIA Portland Cement (PPC) says it will issue 6,5% additional shares in the company, worth R1,1bn, completing the second phase of its broad-based black economic empowerment (BBBEE) transaction.
This means 26% of South Africa's largest cement producer will now be in the hands of black business partners, South African staff and rural women's groups.
The company's existing black business partners would receive 27% of the shares in issue.
"The main reason is to meet the requirements of the Mining Charter," Paul Stuiver, CEO of PPC, said yesterday.
"We see this as taking us to a stage where our mining licences are converted," he said, adding PPC already mined 20-million tons of material a year.
"Employees will be the main beneficiaries," Mr Stuiver said, once they had received shares to the value of R733m.
Existing strategic black partners and new black women's groups will be allocated shares worth R345m.
PPC has 10 mining licences that need conversion from old-order to new-order rights.
"One of our frustrations is that until we sort out our credentials in terms of the mining charter, we can't even get prospecting licences," Mr Stuiver said.
Despite needing to comply with empowerment legislation by 2014, PPC had been "very impressed" with the professional attitude of the Department of Mineral Resources.
He said the engagement with the department had been "tough and fair", and that there had been a "very thorough" process in analysing the move from phase one of empowerment to phase two at the company, despite difficulties over gender transformation in a construction environment.
Mr Stuiver said the share transfer would take place over the next seven years, at a total transaction cost of about 2% of the group's market capitalisation, which was "normal" for empowerment deals.
He said the dilution of the company's dividends in the next seven years would "be in the order of 1,3%" over the period.
"PPC elected to conclude the transaction at group level, rather than create a structure whereby the BBBEE owners would only have rights to their South African operations," Ross Heyns, an analyst at Kagiso Asset Management, said yesterday.
PPC derives about 80% of revenue from SA and the remainder from foreign operations.
Mr Heyns said BBBEE shareholders would own 20,8% of PPC at group level, but the Department of Mineral Resources had agreed to scale up the group's empowerment shareholding by this ratio, translating into an effective 26% holding in its South African operations.
"This may prove favourable for the BBBEE partners as there are far more opportunities for growth in PPC's African operations than there are in their domestic operations," he said.
PPC, along with other South African building and construction firms, has seen its domestic market halve in recent years, following the collapse of global markets and a further fall-off in cement demand after the end of the Soccer World Cup in 2010.