(formely M-Cell Limited) - Business Report 2003 - MTN Group

DIRECTORS’ REPORT (continued)
FOR THE YEAR ENDED 31 MARCH 2003
MANAGEMENT BUY-IN OF AN 18,7% INTEREST IN MTN GROUP THROUGH NEWSHELF 664 (PROPRIETARY)
LIMITED (NEWSHELF 664)
During the reporting period, management and staff announced the buy-in through Newshelf 664 of an 18,7% interest
in the issued share capital of MTN Group from Ice Finance BV/Transnet Limited (Transnet) at an average price of
R13,90 per share.
The financing of this transaction was provided by several institutions and included variable rate redeemable
preference shares to private banks, a combination of fixed rate redeemable preference shares and a participating
redeemable preference share to the Public Investment Commissioner together with promissory notes issued by a
wholly owned subsidiary of Newshelf 664.
Newshelf 664’s ordinary shares are held by a Trust (the Trust) for the benefit of eligible permanent staff employed by
MTN Group and its South African subsidiaries as well as eligible senior staff members of its African operations. This is
expected to benefit approximately 2 400 eligible employees. Such benefits will vest over the six year funding period,
but will not be tradeable until all obligations, including all debt and equity related funding obligations to several
financing institutions, have been met.
The Newshelf Trust has five trustees, two of whom are directors of the MTN Group namely, P F Nhleko and I Charnley.
Furthermore, all the directors of Newshelf 664 have been appointed by the Trust namely, P F Nhleko, I Charnley,
P L Zim, R D Nisbet, and R S Dabengwa (jointly the MTN Executive Directors or the promoters).
The MTN Executive Directors are also included among the eligible employees who will be potential beneficiaries of
the Trust.
Consequently the interests of the MTN Executive Directors in respect of the MTN Group shares held by Newshelf 664
are as follows:
●
●
●
As a result of being trustees of the Trust, P F Nhleko and I Charnley, together with the other trustees, have an
indirect, non-beneficial interest in the MTN Group shares which are currently held by Newshelf 664. Newshelf 664
holds a total of 309 000 000 ordinary shares in MTN Group.
As a result of being directors of Newshelf 664, P F Nhleko, I Charnley, P L Zim, R D Nisbet and R S Dabengwa have an
indirect, beneficial interest in respect of voting rights pertaining to the MTN Group shares which are currently held
by Newshelf 664.
As a result of being promoters of the transaction and beneficiaries of the Trust, the MTN Executive Directors have
an indirect, beneficial interest in MTN Group shares that are held by Newshelf 664. The beneficial interest will be in
the form of rights to participate in a predetermined ratio (“the participation ratio”) in the net surplus in Newshelf
664 which may arise once all of Newshelf 664’s obligations have been met including debt and financing
obligations to its financiers. This is currently anticipated to be in 2008. (Certain of the financial institutions who
funded the acquisition of the MTN Group shares also participate in the growth of the shares of the MTN Group
before any net surplus is paid.)
Subject to the terms and conditions of the Trust Deed, the rights to participate will accrue to the MTN Executive
Directors in equal tranches of 16,6666% per annum for six years on condition that in the event that any director is
not in the employ of MTN Group at the end of the six-year period, he or she will only be entitled to that percentage
of the rights to participate which will have vested prior to the MTN Executive Director leaving the employ of
MTN Group. The benefits (if any), which accrue to the MTN Executive Directors will only be received once
Newshelf 664’s obligations to its financiers have been extinguished which is expected to take place at the end
of the six-year period. The participation ratio in the net surplus of each MTN Executive Director is as follows:
● P F Nhleko 7,9270%;
● I Charnley 5,5869%;
● R S Dabengwa 5,5869%;
● R D Nisbet 5,5869%; and
● P L Zim 5,5869%.
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MTN BUSINESS REPORT 2003