11/05/2010 Elias Masilela during the National Planning Commission's inaugural meeting. Picture: Phill Magakoe 11/05/2010 Elias Masilela during the National Planning Commission's inaugural meeting. Picture: Phill Magakoe
Roy Cokayne
The core goal of the takeover of AfriSam by the Government Employees Pension Fund (GEPF) was the preservation of almost 2 000 jobs at the cement producer and ensuring the protection of competition in the industry, the Public Investment Corporation (PIC) said yesterday.
Elias Masilela, the chief executive of the PIC, welcomed the Competition Tribunal’s approval on Tuesday of the GEPF’s takeover of AfriSam, adding that the regulatory approval obtained from both the Competition Commission and the Department of Mineral Resources indicated forward momentum.
The takeover was approved subject to the GEPF not appointing any directors to the board of Pretoria Portland Cement (PPC) or any other cement producer in South Africa for as long as it controlled AfriSam.
It must ensure the continued application of the existing Chinese walls between the teams handling its investments in AfriSam and in PPC.
Masilela said the takeover and restructuring of AfriSam went a long way in providing operational certainty for AfriSam’s management team and staff, and the industry.
The regulatory approvals were required to allow the PIC to proceed with exercising the GEPF’s rights to convert its preference share holding in AfriSam into ordinary equity and calling for redemption of the GEPF’s preference share debt from Bunker Hills Investments and related parties.
However, Masilela stressed these approvals and decisions ought to be given the level of responsibility they deserved by all parties involved as “only then will they serve the broader interests of AfriSam and the country”.
Swiss cement producer Holcim sold most of its South African business to black investors led by Bunker Hills Investments in 2006, leading to the creation of AfriSam.
Bloomberg earlier reported that Bunker Hills, with a 37 percent stake, was seeking a permanent high court order to prevent the PIC from redeeming its R4.7 billion in preference shares in AfriSam. It obtained an interim order in October temporarily stopping the PIC from converting the shares.
However, the PIC reported on December 9 it had reached an agreement with a majority of the providers of senior debt to AfriSam related to the proposed restructuring of the debt.
It said the implementation of the restructuring, as contemplated in the agreement, would result in a significant debt reduction in excess of R15bn, which would free AfriSam from its historic debt burden created by the leveraged buyout and allow it to focus on its operational fundamentals.
The PIC, which manages the GEPF’s R1 trillion assets, said the agreed restructuring had the support of more than 85 percent of AfriSam note holders.
The restructuring agreement concluded between the parties followed a court order issued on December 2 confirming the PIC’s rights to convert its preference shares into equity.
In terms of the agreement, Pembani Group, formerly Worldwide African Investment Holdings, the largest note holder in AfriSam, elected to convert a large portion of its debt into equity and the remaining senior debt of about E392 million (R4.2bn) would be rolled into new notes maturing at the end April 2013 or 12 months after the implementation of the restructuring.