De Beers to Sell 26% Stake in DBCM for $563.57 Million
November 08, 05
De Beers announced today that it is selling a 26 percent stake in De Beers Consolidated Mines (DBCM) to a black-owned firm for about R3.8 billion ($567.57 million). The new company, Ponahalo, will be owned by DBCM employees and pensioners and headed by Manne Dipico, former premier of the
In a public announcement, attended by
The upfront sell of the 26 percent stake, five years ahead of the 2010 deadline set by the government, was done because De Beers believes that when doing something it should be done properly, Oppenheimer said.
Ownership of Ponahalo will be 50% by De Beers South African based employees and pensioners and 50% by a consortium of business and broad based groupings, namely Ponahalo Investment Holdings.
Ponahalo Investment Holdings includes business individuals (both men and women), and trusts representing disadvantaged women, people with disabilities and mining area communities.
Ponahalo’s Chairman will be appointed Deputy Chairman of DBCM and serve on DBCM’s Executive Committee. Two other Ponahalo nominees will be appointed to DBCM’s Board of Directors.
Ponahalo will utilize $1.48 million (escalating at 5% per annum) of its dividend income each year, or more than R100 million ($14.8 million) in aggregate over the first 10 years, to make other investments in South Africa.
Ponahalo will also set aside R5 million ($741,000) each year, or R50 million in aggregate over the first 10 years, which will flow directly to trusts for the benefit of disadvantaged women, people with disabilities and communities around DBCM’s mines.
Over the first 10 years, the balance of Ponahalo’s dividend income will be used for debt service.
De Beers says it will provide “meaningful financial facilitation to ensure a robust and sustainable transaction”.
Click here for the full slide presentation of the announcement.