NEF finances R41.9 million leveraged buyout of CDC

EMPOWERMENT agency the National Empowerment Fund (NEF) today announced the conclusion of a R41.9 million investment deal to finance a 100% buyout of Colliery Dust Control (CDC).

The transaction involves a partnership between a black economic empowerment (BEE) consortium led by Bulelwa Geza and existing management of CDC.

“The deal structure leverages the skills sets of the BEE consortium and that of the existing management team thereby facilitating skills transfer and ensuring business continuity and growth,” NEF said in a statement.

CDC is a manufacturer of colliery dust control systems, and the provision of ancillary maintenance and technical support systems for the coal mining industry in South Africa.

CDC, which was established 30 years ago and has a 70% share of market, pioneered the development of the dust control systems that are used to improve working conditions and productivity in underground coalmines.

NEF chief investment officer Frencel Gillion said the deal represents another successful step in the transformation of the mining services sector, with the empowerment of niche support providers like CDC complementing government’s transformation objectives for the mining and energy sectors.

“In line with the NEF mandate, this transaction not only represents meaningful empowerment in the strategic energy sector, but also represents the empowerment of women in industry with approximately 35% of the CDC shareholders now comprising women,” Gillion said.

Women with experience in the fields of mechanical engineering, transformation and human resources play a role in the BEE consortium that now owns the company.

CDC deputy managing director Bulelwa Geza is excited by the challenges that lie ahead for the company.

The company will use its first disbursement of R41.9 million from the NEF to finance the acquisition and to provide working capital during the transition phase.

“The mining and energy sectors are of critical importance to South Africa, and providing coal in an efficient and safe manner is one of our biggest strategic challenges as a country,” Geza said.

A staff trust with a shareholding of 10% has also been created in order to reward the contribution of long-serving employees, some of whom have been with the company for 20 years or more.

In addition, a management trust accounting for 20% of the shareholding has been created to incentive management to grow the business in partnership with the BEE shareholders.

Source: i-net bridge

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NEF finances R41.9 million leveraged buyout of CDC

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