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Karsten Wellner, CE of Ascendis Wealth talks to Alec Hogg about progress with regards to BEE ownership of the company. The long term goal is to have at least 25% BEE ownership as they view themselves as a truly South African company. The latest deal, which is supported by existing shareholders including Coast-2-Coast takes BEE ownership to over 10%. Karsten explains. – CP
ALEC HOGG: Ascendis Health has struck a deal, in which it will increase its BEE ownership, over the next three years. The Chief Executive Karsten Wellner is with us in our Cape Town studios, 140 million, Karsten. We’ve also been seeing, Coast-2-Coast, your previous controlling shareholder, I see they are now, significantly below 50 percent, are the two hand-in-hand?
KARSTEN WELLNER: Yes, it is definitely hand-in-hand and good afternoon Gugulethu and Alec. I am very happy to be on your show again. This deal was, for us, quite important because, again, like our first deal with the Mine Workers Investment Company, and later on with the Women Development Bank, it doesn’t dilute our existing shareholder base because the deal is structured via Coast-2-Coast. Like you say, our ex majority shareholder, they are now around, indirectly, entire around 48 percent, and it gives a nice comfort for our existing shareholders because we are not diluting their shareholder base.
ALEC HOGG: So what’s the future? You say that it can increase from this level?
KARSTEN WELLNER: Not can, Alec. It has to because we are of course aware of working in South Africa, as a corporate citizen, we have to fulfil our duties and the present shareholding we have, from a BEE point of view, is not enough. We have to increase this strategically, going forward and we are thinking really of the mid-term, of 20 to 25 percent of our shareholdings should be in black hands. With this deal we are going considerably above the ten, actually close to 15 percent, over this two-year period, but we have to do something also in the two years, to get it, yearly, to above, at least ten percent, which we are close by at the moment, so it is not very far any more. That we have, to hit our first target, to be above ten percent. I think that is important, from an equity point of view, from a balance scorecard point of view, but also from our strategic positioning, as a strong South African company, with strong brands, and that’s our home base, so we have to actually have a certain BEE shareholding, in our business.
GUGULETHU MFUPHI: You’ve mentioned new partners. Have you identified any candidates?
KARSTEN WELLNER: Yes, we are talking to the existing partners, our first partners, (strategic partner), was Mine Workers Investment Company, and then also the Women Development Bank, who actually followed now, this one again, and we are talking to some other partners, who might form a consortium to come together. It all must be along with our strategic partners, and the strategic partners are definitely the MIC, and the Women Development Bank, who actually will follow with us, going through that.
They have indicated, both of them have indicated they trust our model. They trust our management, and they are going further with us but we have to see. We are in negotiations, but it is step-by-step and, yes, we are quite happy that, so far, in the last six months we’ve achieved R390.m of commitments into Ascendis, which shows the trust these partners have.
ALEC HOGG: And the process as well, is now made a lot easier by the fact that in those last six months your share price is up by 60 percent as well, so I guess, this was always something you might have wanted to have done but not at too low a price level.
KARSTEN WELLNER: Exactly and that’s the reason why we like to steer it, to structure it via Coast-2-Coast, because it doesn’t affect dilution of the existing shareholders and, of course, when you are doing it directly the JSE has certain regulations. You can give only a maximum of ten percent discount and we structured a deal, via Coast-2-Coast, that they get a certain coupon discount partners, for over three years. Then they have a mandatory conversion off their debenture into Ascendis shares, at certain prearranged discounts, which the burden of that shows at Coast-2-Coast because Coast-2-Coast is our major shareholder, knows how important considerable BEE shareholding in our business is. That is the reason why we are pushing these deals forward.
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