Barloworld awaits shareholders thumbs-up on R2.8bn deal
JOHANNESBURG – Barloworld yesterday said its board had approved the R2.8 billion broad-based black economic empowerment (BBBEE) deal with the ball now in the shareholders’ court to give it the final nod in February.
Barloworld said the deal would be done through the sale of its property portfolio with value growth over time handed to a black-controlled company (PropCo).
The deal would also see the broad-based participation of 14 000 employees and an offer to the public to buy PropCo shares.
Barloworld said it would also oversee the creation of a broad-based foundation that would hold 3 percent of its issued ordinary shares.
Chief executive Dominic Sewela said the proposed transaction would, however, remain subject to shareholder approval in February.
“The approach we took is that this should be an all-inclusive deal,” Sewela said. “The funding has already been sourced from the banks. Our view is that we will put a 10-year structure where there is a lease in place and from there we will review the deal and probably extend the lease by another five years.”
Sewela said the key condition put out by the group for the successful conclusion of the transaction was that PropCo should buy Barloworld shares.
Sewela said past BBBEE transactions had prepared the group better to structure the deal into a more successful venture. He said the group would use the proceeds from the R2.5bn sale of its Iberian equipment business earlier this year to make a “significant” investment soon.
Sewela said Barloworld was in the process of consolidating the historic deal with Caterpillar. He said the deal would see Caterpillar bringing its heavy earth-moving equipment and power-generation machines to South Africa.
“I am well underway in my discussions with Caterpillar to be in pole position for an opportunity. "They have since come back to me to identify a specific opportunity and I am undergoing an administrative process with them. When I am in the position to start negotiations I will inform the market appropriately.”
Yesterday Barloworld reported a 2.4 percent increase in revenue for the year ended September to R63.4bn, while its operating profit improved by 7.9 percent to R4.4bn.
The company said its return on equity from continuing operations increased to 11.4 percent from 10.5 percent last year.
It has now set its eyes on unlocking further value in the government's plan to establish an infrastructure fund as part of the economic recovery plan to stimulate local demand for construction equipment.