SHAREHOLDERS in Exxaro Resources approved the R3.52bn repurchase of shares held in the firm’s empowerment company MS333, a development that paves the way for a replacement empowerment structure.
The coal producer and mining investment firm said in an announcement to the Johannesburg Stock Exchange today that a majority of 99.37% had approved the transaction at a general meeting, held in Pretoria.
Some 75% of total share capital voted directly or though proxy votes, the company said. A second special resolution that was set down to revoke the buy-back should the first special resolution fail was not exercised.
On November 22, Exxaro unveiled a new black economic empowerment (BEE) scheme in which its existing 50.19% BEE structure was to be unwound and replaced with new BEE owning 30% of the group.
Details of the transaction are complex but in essence it requires Exxaro to repurchase shares owned in it by its BEE partner Main Street 333 (MS333), a company in which former CEO, Sipho Nkosi and Mxolisi Mgojo, Exxaro CEO are shareholders.
This will enable MS333 shareholders to settle their bank debts – including a R486m loan to Exxaro itself – and then provide them with options to either reinvest in Exxaro’s new BEE structure, or take cash.
The transaction comes at a time when the mining industry is waiting for details of the redrafted mining charter, which was widely expected to be gazetted in parliament during the last days of 2016.
It is unknown if the redraft will recognise previous empowerment deals where the black-owned partners have either cashed out of their investment following a certain lock-in period – as in the case of Exxaro – or where the transaction failed.
Eskom, the company to whom Exxaro sells the majority of its coal production, said it would not recognise Exxaro as a fully empowered company as its new empowerment structure sees 30% of its shares black-owned whereas previously it was 53% owned and controlled.
A meeting was due to be called between the companies with Exxaro saying that it didn’t believe Eskom’s insistence on 50% plus one share black ownership was policy in order to supply the power utility.
