JSE-listed construction and engineering group Basil Read on Thursday said it had agreed a deal that would see the black-empowered Sishen Iron Ore Company Community Development Trust (SIOC-cdt) own an effective 25.1% stake in the company.
The total value of the broad-based black economic-empowerment (BBBEE) transaction was R521.1-million, of which R99.3-million would be paid by SIOC-cdt in cash and R421.8-million would be in the form of vendor funding by way of a notional loan.
SIOC-cdt would subscribe for 7 883 243 ordinary shares and 33 607 507 "A" ordinary shares in Basil Read.
Following the implementation of the transaction, Basil Read would have about 36% BBBEE equity ownership, as determined by the Department of Trade and Industry’s BBBEE Codes of Good Practice (DTI codes).
Basil Read was currently a Level 3 contributor in terms of the DTI codes and said the transaction would improve its BBBEE rating to a Level 2 contributor.
The transaction had been structured based on a four-year, lock-in period, with an option to extend for one additional year by agreement to that effect.
Basil Read said in a statement that SIOC-cdt was also involved in the mining sector, which it sees as a key focus area for growth. “The strategic partners may benefit infrastructure development within the various broad-based communities and contribute towards bolstering Basil Read’s order book.”
The company added that SIOC-cdt demonstrated its commitment to Basil Read and a sustainable BBBEE transaction by contributing a meaningful portion of the transaction value in cash.