Holcim, investor partner oppose bid for Afrisam

Holcim, investor partner oppose bid for Afrisam
Published: 28 October 2011

Afrisam Ltd’s largest shareholders, including Holcim Ltd, said they oppose a takeover bid by South Africa’s government-owned pension fund manager because it will undermine efforts to redistribute wealth to black investors.

The Public Investment Corp. and former MTN Group Ltd. Chief Executive Officer Phuthuma Nhleko, who is black, are bidding to convert debt they own in South Africa’s second-largest cement- maker into shares as interest repayments threaten Afrisam’s operations. In 2006 Holcim created Afrisam by selling most of its South African business to Bunker Hills Investments Ltd.

A conversion will dilute existing shareholders and leave Bunker Hills with “almost nothing,” Mofasi Lekota, a director at the Johannesburg-based company, which owns 37 percent of Afrisam, said in an interview. “Are we spreading the country’s wealth or simply allowing established black investors to cannibalize others?”

South Africa’s government is pushing companies from banks to mines to sell stakes to black investors to make up for discrimination during apartheid, which ended in 1994. Bunker Hills funded the acquisition, its only investment, with about ZAR23bn (US$2.9bn) in debt, which it is struggling to repay after a recession crimped cement demand in Africa’s largest economy. Holcim owns 15 percent of Afrisam and the company’s management holds 13 per cent.