Zimbabwe: BAT International to Finance Local Empowerment Vehicle

Source from:  Financial Gazette (Harare) 11/02/2012

British tobacco firm, BAT International Holdings (UK) Limited, is to splurge cash into an employee share ownership trust (ESOT) meant to allow its subsidiary, British American Tobacco (BAT) Zimbabwe, to comply with the country's indigenisation laws.
 
Zimbabwe signed the Indigenisa-tion and Economic Empowerment Act into law on March 9, 2008, and related regulations were gazetted as Statutory Instrument 21 of 2010 issued on January 29, 2010.
 
The related regulations provide for non-indigenous companies operating in Zimbabwe to arrange for 51 percent of their shares or interests therein to be owned by indigenous Zimbabweans within five years, subject to an analysis based on information that was to be filed with the Minister of Youth Development, Indigenisation and Empowerment, currently the ZANU-PF legislator, Saviour Kasukuwere.
 
BAT Zimbabwe is owned 56,95 percent by BAT International. The Ministry of Indigenisation and Economic Empowerment has said the company is only 6,22 percent indigenous.
 
The proposed financial assistance from BAT International would comprise loan facilities at an interest rate of eight percent per annum, with no fixed repayment terms.
 
BAT International has indicated that it will donate shares to management and employees after shareholders unanimously voted in favour of the proposed indigenisation transaction at an extraodinary general meeting last week.
 
This resulted in the company's authorised share capital increasing by 3,25 million to 20,63 million.
 
The current indigenisation status of BAT Zimbabwe effectively means that shareholders like Old Mutual, with a 19,1 percent stake, are not considered indigenous, even though they hold the shareholding on behalf of Zimbabwean policyholders. In a circular to shareholders, BAT Zimbabwe said it would be 26 percent indigenous by October 28, 2012, 36 percent by October 28, 2013, 46 percent by October 28, 2014, and 51 percent by October 28, 2015.
 
As part of the transaction, BAT International will donate 1 031 676 shares to the ESOT. The ESOT would also acquire another 1 031 676 shares at arm's length by way of subscription. In total, the ESOT would get 10 percent of the issued share capital.
 
Of the 3,252 million shares to be issued, 1,031 676 would go towards the Employee Share Ownership Trust and 2,220 324 million or 10,76 percent to a Corporate Social Investment Tool.
 
A total of five percent of the 1,031 million in the ESOT are earmarked for management.
 
The balance of the unissued ordinary shares would be placed under the control of directors. Enditem