Original publish date – Fri, 20 Feb 2009 13:02:35 +0000, Keith
Today’s issue of The Financial Mail explains that due to the economic meltdown, R41 billion worth of BEE deals may be lost. Many listed companies used the fact the the JSE is rising as a method of helping their BEE partners finance the purchase of their shares. They also use dividend payout as a method of finance. With the JSE dropping, the strike price (i.e the discounted price that the shares were offered to the new partners) is now higher that the actual share price. This has thrown many deals into disarray.
It does not mean that BEE is in disarray – only one element – ownership – has a problem. Companies can, and in the current economic climate, should, worry about the other elements. When the JSE improves ownership will be in vogue again.