BAT Complies With Indigenisation

CIGARETTE maker British American Tobacco Zimbabwe is offering about 21 percent of its shares to its employees and indigenous people in part fulfilment of indigenisation and empowerment requirements, the company said last Friday. BAT, one of the most capitalised companies on the Zimbabwe Stock Exchange, has proposed to offer a 10 percent stake to its almost 200 employees to be held by an Employee Share Ownership Trust and about 11 percent to a corporate social investment trust.

BAT International Holdings, according to the proposal, will give its shares equivalent to 5 percent in BATZ to ESOT, a trust of all full-time employees as at October 1 2012. BAT UK is a 57 percent controlling shareholder in the local company. Another major shareholder is Old Mutual, with 17 percent equity. BAT further proposed that 1 031 676 of the issued share capital be acquired by the ESOT, by way of subscription, representing 5 percent of its issued share capital. The ESOT shall subscribe for shares at the ruling price on the ZSE. The community trust will also acquire 2 220 324 shares in BATZ by way of subscription, representing 10,76 percent of the company's issued share capital. The trust will include parties involved in tobacco-related developmental programmes, the company said.

BATZ has further proposed to provide loan facilities to the trusts. The loan amount will be determined by the value of transaction at the applicable selling price plus registration and administration costs at an interest rate of 8 percent per annum. Using BATZ's share price of US$4,47 on Thursday last week, the company will require at least US$14,5 million to fund the proposed indigenisation transaction. On Friday, the company was bid and offered at US$4,33 and US$5,00 respectively. The loan tenor is indefinite and there are no fixed payment terms. A notice of the extraordinary general meeting to be held on October 26 this year has been published.

The new shares in terms of the transaction will be allotted on October 31 and listed on the same day. Conditions precedent include passing of the resolutions at the EGM, approval by the National Indigenisation and Economic Empowerment Board, and approval by Reserve Bank of Zimbabwe's Exchange Control Division in respect to a donation of 1 031 676 BATZ shares by BAT UK. If approved, BATZ will be in compliance with the country's indigenisation requirements for the first year. The proposed transfer of 21 percent stake of the company will result in indigenous Zimbabweans controlling 26 percent of the company.

Locals currently hold 6,2 percent of the firm. This is part of the company's plan to meet the country's indigenisation and empowerment requirements which require foreign-owned firms to turn over majority stakes to black Zimbabweans by 2015. BAT Zimbabwe managing director Mr Lovemore Manatsa said: "Having been in operation in Zimbabwe for over 100 years, we are proud to be able to continue playing a significant role in the empowerment and economic upliftment of indigenous Zimbabweans." Other foreign-owned companies that have offered shares to workers include Old Mutual. Old Mutual staff now own 10 percent of the country's oldest insurance firm.