The Vodacom YeboYethu broad based black economic empowerment (B-BBEE) transaction is set to conclude and will be succeeded by a new R17.5 billion BBBEE chapter.
The new deal will emerge from a complex set of steps. Here’s a simplified explanation of how they are planning to do it.
Remember that Yebo Yethu was positioned at Vodacom South Africa level. The new proposal aims to lift Yebo Yethu exposure to Vodacom Group (International) level, meaning that the scheme will now have a direct stake on the JSE listed entity and share in international profits.
Step 1: Unwinding the old transaction
Vodacom SA will repurchase some shares from participants of the maturing deal, Royal Bafokeng Holdings (RBH), Thebe, Yebo Yethu and ESOP, to the value of R1.1 billion. This will extinguish debt (vendor finance), leaving the transaction unencumbered.
Vodacom said it is anticipated that post the repurchase of shares, the BEE shareholders will collectively hold about 185.2 million or 3.9% of Vodacom SA shares.
With that done, the ground can be laid for the new R17.5 billion Vodacom Group B-BBEE transaction.
Step 2: Consolidation
Each of RBH and Thebe will exchange their Vodacom SA shares for new YeboYethu ordinary shares, thereby consolidating all of the Vodacom SA BEE shareholders’ interests into a single vehicle, being YeboYethu.
Step 3: Special dividend
YeboYethu will declare a special dividend of up to a maximum of R3.2 billion or R73.00 per YeboYethu ordinary share.
But note that Vodacom Group currently has no intention to settle the BEE transaction in cash. Despite declaration, the payment of the special dividend will only occur in (and payment will be contingent upon) step 6 (in paragraph 2.6) (and each of the preceding steps) being implemented.
Step 4: R1 billion for Vodacom Esop
Vodacom Group, on behalf of itself and the employer companies, will make a capital contribution of about R1 billion to the Vodacom ESOP. The Vodacom ESOP will use the proceeds to purchase YeboYethu ordinary shares for the benefit of vested beneficiaries.
Step 5: Exchanging Vodacom SA shares for new Vodacom Group shares
A new special purpose vehicle, YeboYethu Investment Company, has been created for the purpose of holding YeboYethu’s Vodacom Group shares. YeboYethu Investment is a wholly-owned subsidiary of YeboYethu.
YeboYethu Investment will exchange its Vodacom SA exposure for new Vodacom Group shares to the value of R7.1 billion.
Step 6: Raising funds
YeboYethu will raise R9.9 billion from Vodacom (R5.2 billion) and from third party funders (R4.6 billion).
YeboYethu Investment will use the proceeds received to subscribe for new Vodacom Group shares.