15% BEE for Distell
2005-09-29
DISTELL, South Africa’s premier producer of wines and spirits, has entered into a transaction with a BEE consortium that will acquire an effective 15% in South African Distilleries and Wines Limited (SADW), the company in which all Distell’s operations are held.
Distell Managing Director, Jan Scannell, announced last week that the BEE consortium, through a company named WIP Beverages, comprises all Distell employees; Wiphold, the investment group dedicated to women’s empowerment and a corporate social investment trust (the ‘CSI Trust’) created to benefit disadvantaged communities in those areas where Distell conducts most of its activities.
Scannell said Distell embraced broad-based BEE as a key sustainability imperative.
“We have created a structure that represents an important advance in our transformation strategy as it allows us to give a stake in our business to all our employees, irrespective of position or length of service.
“While the CSI Trust will enable us to help develop the disadvantaged communities with which we most directly interact, the involvement of an established, broad-based empowerment group like Wiphold will greatly assist us in meeting our strategic objectives.
The BEE consortium comprises three constituents: An Employee Share Ownership Plan (“ESOP”), which will hold 45% of the equity, Wiphold, which will manage the BEE consortium and hold a 40% stake, and the CSI Trust, representing disadvantaged communities in areas in which Distell operates, with a 15% interest.
Distell will sell 15% in SADW to the consortium at current market value.
To fund the acquisition, the consortium will issue preference shares to Distell, which will pay a dividend equal to CPIX plus 7%.
Dividends received by the BEE consortium on its investment in SADW will be used to fund the preference dividend and to service the debt over the period of the transaction. At that time, the consortium will have the right to exchange its shares in SADW for shares in Distell.
The ESOP will allocate shares to all qualifying Distell employees not already participating in share option schemes. About 67% of personnel are from an historically disadvantaged background.
Although all qualifying staff will participate equally regardless of position or seniority, additional shares will be made available to staff members with more than five years of service.
The company employs about 4 000 people and has an annual turnover in excess of R5,9 billion.
Wiphold will nominate two directors to the Distell board. They will be imparting their experience in best practice and transformation.
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