Barloworld broadens black ownership in R3.5 billion transaction

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Barloworld broadens black ownership in R3.5 billion transaction

Published Date: 2019-04-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

Barloworld broadens black ownership in R3.5 billion transaction

The industrial conglomerate is selling a portfolio of its SA property to black investors, including employees, management and the broader public.

Barloworld has opened the public offer for its Khula Sizwe property transaction, which will see it transfer a 14% stake in its SA property portfolio to black investors, as well as about 14,000 of its management and employees. The transaction is valued at R3.5 billion.

The properties include commercial, industrial and retail properties across the country, including motor dealerships, and are valued at R2.86 billion. They will be sold to Khula Sizwe, a property holding company specifically set up for the deal, for R2.72 billion, a 5% discount. Khula Sizwe will then lease the properties back to the tenants. Barloworld will provide financial assistance to the Foundation, Barloworld employees and management to their buy shares.

Khula Sizwe will get an external loan to fund 80% of the acquisition cost, with the rest covered by the equity sold to management and employees and through a public offering. The purpose of the public offer is to raise R163.4 million and to give a broader black investor base the opportunity to particulate in the indirect ownership of the properties. Barloworld said if it didn't raise at least R120 million through the public offer it would scrap it and the Management Trust would take up the additional shares. Khula Sizwe will repay the loan with the rental income it collects from the properties. Barloworld is covering the R174.2 million for the Employee Trust's 32% stake.

After a five-year lock-in period, Khula Sizwe plans to list on the BEE segment of a recognised stock exchange.

The Khula Sizwe offer closes at the end of May.

Barloworld's shares gained 1.3% to R136.92 yesterday.





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