Troubled Net 1 ‘invokes’ Mandela in its BEE deal

The CEO of Net 1 UEPS Technologies, Serge Belamant, has invoked the name of Nelson Mandela in glorifying the company’s proposed black economic empowerment (BEE) deal.

The Nasdaq and JSE listed IT firm, Net 1 UEPS Technologies, announced this week plans to sell 4.4 million shares in South African unit to BEE partners. The company embroiled in a fight with Absa over the R10bn South African Social Security Agency (SASSA) contract, said it has signed an agreements with two BEE partners. These partners are Business Venture Investments 1567 Proprietary Limited and Born Free Investments 272 Proprietary Limited.

Belamant said “Having signed our Relationship Agreements we continue to make strides towards concluding our BEE transaction, which we believe epitomizes the spirit of the meaningful transformation that the late President Mandela fought and stood for.

Our actions in this regard lay the foundation for a long-term sustainable business in South Africa together with the addition of BEE partners, who we expect to be actively engaged in identifying and driving new growth opportunities for the Company.”

Net 1 UEPS Technologies said the BEE shares will be issued at R60.00 per share and the price was calculated as 75% of the closing price on December 6 2013.

The company said “In order to facilitate the transactions, the Company’s wholly owned subsidiary Net1 Applied Technologies South Africa Proprietary Limited, will lend the funds to the BEE partners at a market related interest rate to effect the purchase of the BEE shares and these shares will act as the collateral for the loan.”

The loan is repayable over a period of five years and the transactions are subject to certain conditions, including obtaining the relevant regulatory approvals.”

Net 1 UEPS Technologies shares were trading around R82 on the JSE which left the company with market capitalisation of R3.7bn. The company’s shares have touched levels close to R130 per share this year but have pulled back. This pull back could have something to do with bad news surrounding Net 1 UEPS Technologies’ legal fight with Absa over the R10bn SASSA contract. Net 1 UEPS Technologies division, Cash Payment Masters, was awarded the SASSA tender in 2012. Absa which had also tendered for the contract via a unit called AllPay cried foul and took the matter to court. The matter has reached the highest court in the land, Constitutional Court, which ruled that Cash Payment Masters/SASSA contract is invalid. The court ordered the parties to come up with a solution that will not disturb the distribution of grants to 15 million people affected by the contract.

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