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New scheme to be launched following the biggest B-BBEE FMCG payout in South Africa’s history
The South African Breweries (SAB) today announced the creation of their new R5.4bn broad-based BEE ownership scheme, SAB Zenzele Kabili. SAB Zenzele Kabili follows the decade-long success of the SAB Zenzele scheme, which will have delivered approximately R14bn in value for its beneficiaries, including SAB Zenzele’s 29,000 retailer shareholders, 13,000 current and former SAB employees and the SAB Foundation when it unwinds in April 2020. This is the largest and most prolific broad-based BEE transaction concluded in the South African FMCG industry. The SAB Zenzele Kabili scheme, which remains subject to shareholder approval, will replace and build on the success of SAB Zenzele with the intention of generating value for existing and new BEE investors.
The over 40,000 shareholders who invested in SAB Zenzele will receive R9.7bn in value when the transaction unwinds in April 2020 and will elect to receive this value in either AB InBev JSE-listed shares or cash proceeds from the sale of these shares. SAB has received consistent feedback from SAB Zenzele shareholders that they want the opportunity to re-invest part of the value from the unwind of SAB Zenzele into a new empowerment scheme that will hold shares directly in AB InBev. Accordingly, the new scheme will allow SAB Zenzele shareholders the opportunity to re-invest.
Utilising a scheme of arrangement, which requires 75% approval from SAB Zenzele shareholders, SAB Retailers will invest a minimum of 15% of the value of their SAB Zenzele unwind in exchange for shares in SAB Zenzele Kabili, which will be listed on the BEE Segment of the JSE. SAB Zenzele shareholders will vote on the scheme at the SAB Zenzele annual general meeting to be held at Nasrec in Johannesburg on Thursday, 19 March 2020.
The R5.4bn SAB Zenzele Kabili transaction will be funded through a combination of R678m equity contribution from existing SAB Zenzele shareholders, R600m equity contribution from a new broad-based ESOP funded by SAB, R344m reinvestment by the SAB Foundation, R811m of AB InBev discounted shares from SAB and R2,973m of 10 year preference share vendor funding from SAB.
The benefits of re-investing in SAB Zenzele Kabili include the fact that SAB Zenzele Kabili will hold R5.4bn worth of shares in AB InBev’s global operations, substantial and attractive facilitation from SAB through discounted shares and geared exposure through attractive vendor funding at 70% of Prime for 10 years. SAB Zenzele Kabili shareholders will be able to trade their SAB Zenzele Kabili shares from the outset and will be entitled to receive dividends as 25% of the dividends received by SAB Zenzele Kabili, after servicing administrative and operating costs, will be paid to SAB Zenzele Kabili shareholders as a dividend each year.
“Following the success of SAB Zenzele, I look forward to the next chapter with SAB Zenzele Kabili” says Richard Rivett-Carnac, Director M&A and Treasury, SAB. “I believe we have reached our goal to deliver real economic benefits to thousands of South Africans through SAB Zenzele. We are excited to offer SAB Zenzele shareholders the opportunity to partner and invest in SAB Zenzele Kabili and build on the strengths of SAB Zenzele, empowering qualifying shareholders even further, as we enter the new decade. The opportunity to own AB InBev shares through SAB Zenzele Kabili means that they will participate and benefit from the growth of our global business. SAB Zenzele Kabili will also have enhanced liquidity and transparency of pricing for shareholders. Through engagement with the employee trust, we have worked on the principle of equal allocation, as we feel is the right way to allocate shares. We have worked closely with all of our stakeholders to build solid partnerships” he concluded.
“SAB is committed to contributing to long term economic growth and development in South Africa” said Andrew Murray, Vice President Finance, SAB. “With empowerment and ownership as key imperatives and core beliefs of the business, SAB intends to list the SAB Zenzele Kabili scheme on the JSE on Wednesday, 15 April 2020” Murray concluded.
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