SABMiller plans to enter into a broad-based black economic empowerment transaction, the brewing giant said on Wednesday.
This would involve an equity issue of around 10 percent of its South African subsidiary, South African Breweries, to a broad base of black participants, it added.
The value of the deal was US$750 million (R6 billion), SABMiller said.
The move reflected the groups "long-standing commitment to socio-economic progress in South African society," Malcolm Wyman, chief financial officer, said in a conference call.
Participants would include SAB's employees; black-owned licensed liquor retailers and liquor licence applicants, as well as black-owned customers of ABI, the soft drinks division of SAB; and the broader South African community through the SAB Foundation, Wyman added.
He said the deal would not impact on the current year's earnings.
"The transaction is expected to be implemented in the first half of 2010," he said.
The transaction would not require any external bank funding, and would require only a small cash investment by licensed liquor retailers, liquor licence applicants and customers of ABI.
Cash dividends were expected to be paid to participants from the first year.
Wyman said at the end of the ten year transaction period, participants would exchange their shareholdings in SAB for shares in SABMiller.
The economic cost of the transaction to SABMiller, based on SABMiller's current assumptions and on market conditions as at Friday June 26, was calculated at around US$220 million (R1.8 billion).
According to SABMiller, the deal would materially enhance SAB's compliance with the SA government's Codes of Good Practice on Black Economic Empowerment.
In addition the deal would support "the normalisation of the South African liquor industry" by supporting liquor licensing in South Africa.
"By seeking to promote sustainable economic growth and social development in South Africa, the transaction will align the interests of the group's South African stakeholders with SABMiller's shareholders, and will maximise long term shareholder value," Wyman said.
Graham Mackay, chief executive of SABMiller plc, said in an earlier statement the transaction had been structured to maximise benefits for all SABMiller's stakeholders and to deliver genuine broad-based black economic empowerment.
"There are three innovative and distinctive features of this transaction. Firstly, the transaction places no reliance on external bank funding, and requires only a relatively small and hence affordable cash investment from retail participants.
"Secondly, a meaningful dividend stream is expected to be paid to all participants for the whole of the ten-year transaction period, thereby delivering a significant economic benefit from the first year.
"Thirdly, the transaction aims to benefit the stakeholders who have made a real contribution to SAB's success as well as the broader South African community through the SAB Foundation."
Norman Adami, managing director of SAB, said the group was determined to design a transaction that would deliver truly broad-based and tangible benefits.
"We believe this transaction will do that from the beginning.
"This deal is good for South Africa and good for SAB," he added.
Sapa
