Johannesburg - Aveng Grinaker-LTA has in a major empowerment transaction agreed to sell an initial 45-percent economic interest in the company to black woman-owned investment group Kutana Construction for a maximum of R756 million.
The transaction will be effective from about February 1.
Aveng said yesterday that Kutana Construction had also committed to assist Aveng Africa to fulfil its transformation obligations in terms of the settlement agreement reached between the government and Aveng and five other construction companies.
Transformation
In terms of this agreement the companies agreed to collectively contribute R1.25 billion over 12 years to a fund that would be established for socio-economic development and for each of the signatories to the agreement to undertake transformation initiatives.
These included two options: for the companies to become fully transformed with at least 40 percent equity in the hands of black South Africans or committing to mentor up to three emerging black-owned enterprises to enable them to sustain a cumulative combined annual revenue of at least 25 percent of the mentor companies’ annual revenue by 2023.
Aveng said the group would through the implementation of this proposed transaction achieve its transformation objectives by introducing a black woman-owned participant and emerging black contractors into the market and developing and attracting black professional and management skills to the construction sector.
The group said it would also create a platform for growth and sustainability for the business within the domestic construction industry and align the strategy of the business with government’s transformation agenda and policies.
It said the group had completed the first phase of its strategy to stabilise Aveng and was executing the second phase of positioning Aveng for profitable growth.
The 45 percent economic interest disposed of to Kutana Construction equates to R203m, based on the net assets attributable to the business of R450m at end-June this year.
Thoko Mokgosi-Mwantembe, the chief executive of the Kutana Group, is a non executive director of Aveng and other major South African listed companies. The proposed transaction has been unconditionally approved by the relevant competition authorities but constitutes a related party transaction in terms of JSE listing requirements, which means it is subject to the approval of Aveng shareholders.
Kutana Construction and Aveng Africa will be locked in to the proposed deal for five years from the effective date.
BUSINESS REPORT