Steel giant in fresh bid for BEE scheme

© Oleksiy Holubenko – 123RF.com

In the plan, approved by an overwhelming majority of shareholders on Friday, 18 September, 4.7% of the company's issued share capital will be given to qualifying employees by means of a trust.

The company has not recorded significant achievements in broadbased black economic empowerment (BEE), and its scheme will do much to enhance its standing with the government.

The Ikageng Broad-Based Employee Share Scheme will be the first BEE deal on ownership level since the company began trading as ArcelorMittal SA about nine years ago. A previous attempt to improve its status fell through.

The company needs state help to fight off cheap Chinese steel imports, which are threatening the viability of its business and could result in the closure of its Vanderbijlpark plant.

It has already been granted tariff protection in the form of a 10% ad valorem duty on two of its products, but wants protection for other products as well. Along with other local steel manufacturers, it is asking for protective tariffs and antidumping duties.

The scheme targets middle management and lower-level employees who do not qualify for the company's long-term incentive plan for senior management.

A trust will hold the shares and issue trust units notionally.

A minimum of 60% of the economic benefits of the scheme will accrue to black employees, who will benefit 15% more than nonblacks. Eligible black employees will qualify for 2,250 trust units as opposed to 1,950 for nonblack staff.

The scheme will last for five years, during which the trust units cannot be sold. Thereafter they may be converted into a direct holding, or beneficiaries may be paid the proceeds from the sale of the shares.

Source: Business Day