South African Breweries launches US$361m share ownership scheme

SOUTH AFRICA – The South African Breweries (SAB) has launched a new R5.4 billion (US$361m) broad-based BEE ownership scheme dubbed, SAB Zenzele Kabili.

The brewer said that the SAB Zenzele Kabili follows the decade-long success of the SAB Zenzele scheme, which will have delivered approximately R14 billion (US$936m) in value for its beneficiaries, including SAB Zenzele’s 29,000 retailer shareholders, 13,000 current and former SAB employees and the SAB Foundation when it unwinds in April 2020.

This is the largest and most prolific broad-based BEE transaction concluded in the South African FMCG industry.

The SAB Zenzele Kabili scheme, which remains subject to shareholder approval, will replace and build on the success of SAB Zenzele with the intention of generating value for existing and new BEE investors.

The over 40,000 shareholders who invested in SAB Zenzele will receive R9.7 billion (US$648m) in value when the transaction unwinds in April 2020 and will elect to receive this value in either AB InBev JSE-listed shares or cash proceeds from the sale of these shares.

Utilising a scheme of arrangement, which requires 75% approval from SAB Zenzele shareholders, SAB Retailers will invest a minimum of 15% of the value of their SAB Zenzele unwind in exchange for shares in SAB Zenzele Kabili, which will be listed on the BEE Segment of the JSE.

SAB Zenzele shareholders will vote on the scheme at the SAB Zenzele annual general meeting to be held at Nasrec in Johannesburg on Thursday, 19 March 2020.

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The R5.4 billion (US$361m) SAB Zenzele Kabili transaction will be funded through a combination of R678 million (US$45m) equity contribution from existing SAB Zenzele shareholders, R600 million (US$40m) equity contribution from a new broad-based ESOP funded by SAB, R344 million (US$23m) reinvestment by the SAB Foundation, R811 million (US$54m) of AB InBev discounted shares from SAB and R2 973 million of 10 year preference share vendor funding from SAB.

SAB Zenzele Kabili will hold R5.4 billion (US$361) worth of shares in AB InBev’s global operations, substantial and attractive facilitation from SAB through discounted shares and geared exposure through attractive vendor funding at 70% of Prime for 10 years.

SAB Zenzele Kabili shareholders will be able to trade their SAB Zenzele Kabili shares from the outset and will be entitled to receive dividends as 25% of the dividends received by SAB Zenzele Kabili, after servicing administrative and operating costs, will be paid to SAB Zenzele Kabili shareholders as a dividend each year.

“Following the success of SAB Zenzele, I look forward to the next chapter with SAB Zenzele Kabili” says Richard Rivett-Carnac, Director M&A and Treasury, SAB.

“I believe we have reached our goal to deliver real economic benefits to thousands of South Africans through SAB Zenzele. Through engagement with the employee trust, we have worked on the principle of equal allocation, as we feel is the right way to allocate shares. We have worked closely with all of our stakeholders to build solid partnerships” he concluded.

“SAB is committed to contributing to long term economic growth and development in South Africa” said Andrew Murray, Vice President Finance, SAB.

“With empowerment and ownership as key imperatives and core beliefs of the business, SAB intends to list the SAB Zenzele Kabili scheme on the JSE on Wednesday, 15 April 2020” Murray added.

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