MTN signs MOU with PIC

SOUTH African mobile phone operator, MTN, has signed a memorandum of understanding (MOU) with the Public Investment Corporation, which will enable it to facilitate the formulation of a BEE transaction in the early part of the new year, the company has said.

MTN said in a statement released on Monday that it currently obtains its equity ownership points in terms of the Codes of Good Practice from the 13,1 percent shareholding which Alpine Trust, through Newshelf 664 (Pty) Ltd, holds in MTN.

The Newshelf structure was established independently of MTN in 2002, and Alpine Trust was designed to be unwound in December 2008. This is expected to happen any time after December 22, and could lead to a significant reduction in the number of MTN ordinary shares held by or for the benefit of historically-disadvantaged South Africans.

To this end, the organisation is proposing new BEE transaction whereby Alpine Trust beneficiaries can continue their long-term relationship with MTN by reinvesting a material portion of their benefits from the Newshelf structure in the BEE transaction.

It is envisaged that the BEE transaction will comprise between 5 percent and 6 percent of MTN’s issued ordinary share capital, which would equate to between 21,2 percent and 25,5 percent of MTN’s South African operations

In terms of an agreement with Public Investment Corporation and Alpine Trust, Newshelf will acquire sufficient MTN ordinary shares on loan account from Public Investment Corporation to enable Newshelf to declare the shares as a dividend to Alpine Trust.

In terms of the MOU, MTN has agreed, in principle, to acquire the entire issued ordinary share capital of Newshelf, or the call option rights thereto, from Public Investment Corporation for its residual nominal value.

Public Investment Corporation has also undertaken in the MOU to make available from its equity portfolio up to 6 percent of MTN`s issued ordinary share capital for purposes of the BEE transaction.

In addition, as part of its empowerment initiatives, MTN intends to establish an employee share ownership plan that will benefit eligible workers of MTN, who do not participate in any of MTN`s existing incentive schemes.