Value Group rolls out black empowerment deal

Logistics company Value Group Limited has signed an empowerment deal to place up to 15% of its shares in the hands of its BEE partners comprising the directors Dr Nakedi Matthews Phosa and Mr Mano Padiyachy and its key black qualifying managers.

The deal will increase Value Group’s already respectable Level 5 empowerment rating, and will give key employees and stakeholders a direct financial incentive to drive future growth and transformation.

The Value Group will issue 14.6 million shares to Phosa and 6.26 million shares to Padiyachy at R3.50 per share in a deal valued at R73 million.  The funding thereof will be provided by a wholly owned subsidiary of Value Group.

In addition, an employee empowerment scheme will place up to 5% of Value Group in the hands of qualifying black managers.

The deal is accompanied by a voluntary share repurchase offer at R3.60 per ordinary share, to hedge against current and future dilution of its stock. It has earmarked R60 million to buy back up to 16,6 million shares.

“It’s been a long time coming,” says financial director Clive Sack. “It was critical for us to do an ownership deal with BEE partners with whom we have had a long term working relationship. In this transaction we are dealing with people who are involved in our business and who can add value to the group.”

Last year Value Group attained a level 5 BEE rating.
Initiatives that helped earn that rating include staff training courses, learnerships, bursaries, its Driver Training Academy, and support for the Ikageng Shelter for Boys.

“We already do a lot for skills development and staff training, we invest heavily in enterprise development and we procure from BEE empowered entities,” says Sacks. “But the element of ownership is critical in being a truly empowered company and we are proud to have achieved this.”

Phosa, a prominent attorney and businessman who also occupies the seat of ANC Treasurer General, was chosen because of his longstanding relationship with Value Group that dates back to 2002.

Director Mano Padiyachy has worked his way up since joining in 2000 as a contracts manager. “Mano is intimately involved in the operations of the business and heads various divisions including logistics, truck rental warehousing and distribution arms of the group,” says Sack.

All the new stakeholders have a lock-in period of seven years, underlining the long-term sustainability of the BEE deal.

The chosen partners and staff have contributed to the group’s development and growth and will continue to be important in driving future growth. The deal will also help the group retain and motivate key black employees by allowing them to participate in the economic benefits and voting rights attached to the Value Group shares.

Raising its empowerment profile will also help Value Group to retain and win new contracts with customers who are increasingly keen to procure from black empowered suppliers.

Value Group was founded in 1981 by CEO Steven Gottschalk who started with a single vehicle. The group now operates more than 4,000 vehicles and has a national infrastructure with depots in every major centre.

Its various divisions provide tailored supply chain services across southern Africa including distribution, transport, clearing and forwarding, warehousing, fleet management, refrigerated vehicles, forklift and commercial vehicle rental and leasing.

The group generated a revenue of R1.35 billion for the year ending February 28, 2010. Although that was down from R1.36 billion in the previous year, the net profit of R91.4 million was up from R85 million the previous year. It declared a final dividend of 10c per share.

Sack says the group weathered the economic downturn and boosted its profits due to pre-emptive cost-cutting measures taken prior to and during the onset of the recessionary environment.

The BEE deal is subject to approval by Value Group shareholders and the JSE.

For further details contact Financial Director Clive Sack on 011-5702000