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BEE group Lereko shells out R1,4bn for Imperial stake

Business Day

2005/04/06
Siseko Njobeni

BLACK economic empowerment group Lereko Mobility has bought a 7,5% stake in listed transportation and mobility group Imperial for R1,4bn.  Lereko Mobility, formed in July last year, consists of Lereko Consortium (51%) and Imperial (49%). Lereko Consortium is made up of Lereko Investments and various community and women’s groups.  Former politicians Valli Moosa and Popo Molefe are the leading shareholders of Lereko Investments. Other shareholders include former CEO of Independent Development Trust Lulu Gwagwa, businessman Eric Molobi and presidential adviser Titus Mafolo.

The deal would see Imperial issue 14,5-million new preferred ordinary shares to Lereko, says CEO Bill Lynch. Lynch said to facilitate the deal, the group would issue 6,2-million of the shares at par value of 4c a share, instead of the Imperial share price of R96,85 a share. That would raise R600m for the transaction. After five years, the preferred ordinary shares would convert into ordinary shares, Imperial said. Lereko Mobility will pay R2m for its stake and would finance the rest through the issue of debentures to Imperial shareholders for a total consideration of R458m, at R31,52 a debenture.  According to the deal, Imperial shareholders will get R65,33 a share and will subscribe for a debenture in Lereko Mobility for each share sold to Imperial.

The debentures would be payable in five years’ time, and would have a minimum yield of about 11,65% a year, according to Lynch. Lereko would get the other R375m funding from financial institutions. For its 49% stake in Lereko Mobility, Imperial would issue 20246 shares, with a value of R2m at R96,85 a share. Imperial said, as a precaution against dilution of shareholder value, the group would, through subsidiary Imperial Corporate Services, repurchase the same number of shares from its shareholders at R96,85 a share.  The scheme would, however exclude shares in Imperial Corporate Services and Ukhamba, a black economic empowerment shareholder that owns 10,1% in Imperial. The company’s shareholders have still to vote on the scheme.

“We have taken all the necessary steps to look after the interests of our shareholders. We believe that shareholder value should not be diminished in the course of empowerment,” Lynch said.  He said Imperial’s turnover had grown 40 times from R1bn in 1994. “We are seeing the benefits of black economic empowerment.” Gwagwa, who is chief operating officer of Lereko Investments, said the consortium chose Imperial because of its role in regional development and the national economy. “We chose them because of their commitment to transformation. They have embraced the spirit of the new SA,” Gwagwa said. Lereko Consortium would have two representatives on the Imperial board.

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