Discovery's BEE deal restructured: BEE partner extending their commitment; locking in substantial value realised to date

09 December 2013 Adrian Gore, Discovery
Adrian Gore, Discovery Limited Group CEO.

Adrian Gore, Discovery Limited Group CEO.

Discovery today announced a restructure of its Black Economic Empowerment (BEE) transaction with WDB Group, a leading broad-based women’s empowerment group operating in South Africa. The restructure will see WDB extend its commitment by an additional two years until at least December 2017; thereby allowing the empowerment group to lock in substantial value realised to date. The initial transaction, done in November 2005, was aimed at contributing to the socio-economic development of women in some of South Africa’s most vulnerable and historically disadvantaged communities.

Adrian Gore, Discovery Limited Group CEO, commented on Discovery’s investment; "For South Africa to succeed as a society, we require a thriving economy in which all citizens are able to participate. Black Economic Empowerment is a social and commercial imperative, enables adequate transformation in our country, and is a necessary step in ensuring economic growth over the long term. For Discovery, having WDB as a partner has been highly valuable. The transaction has benefited various communities in terms of social and economic investment and the participation of the WDB leadership team in the strategic affairs of Discovery, has been highly beneficial.”

In November 2005, Discovery issued WDB with a 3% equity stake in Discovery, worth R378 million. Recognising the challenges faced by historically disadvantaged people, Discovery vendor-financed the transaction, thereby making beneficial ownership accessible to WDB. Discovery also facilitated active participation in the strategic direction of the Company through the representation of the WDB leadership team on the Discovery Board of Directors and other sub-committees of the Board.

Commenting on this transaction, Faith Khanyile, CEO of WDB Investment Holdings said, " The refinancing as well as the realisation of a debt free equity stake in Discovery will enable WDB to further its mandate of driving the economic empowerment of women in South Africa. Of major benefit to the WDB group will be access to future dividends; the dividend cash flows will allow the WDB Trust to grow its development programmes as well as broaden the services that it offers to women entrepreneurs and rural households, thereby contributing to a positive social impact in these communities.”

Today, WDB's stake in Discovery is worth over R1.6 billion. This represents a compound annual growth rate of 20%, and a substantial asset to help achieve WDB's purpose of uplifting rural poor black women. Given this growth, WDB has taken the decision, with Discovery’s consent, to replace the vendor financing provided by Discovery with a third-party financial institution, thereby locking-in the growth.
At the same time, WDB has extended their commitment by an additional two years and will remain invested in Discovery until at least December 2017.

About WDB Group

WDB Group is a leading broad-based women’s empowerment group which was established more than 20 years ago with the aim of facilitating the economic upliftment of rural women in South Africa. WDB’s flagship programme is the provision of credit to poor rural women allowing them to start and grow their micro enterprises; in addition women are trained and assisted in developing and running their businesses, enhancing their household livelihoods and thereby improving the position of women in society overall. The WDB Trust also supports adult education literacy programmes as well as early child-hood development. The WDB Trust is funded by its commercial arm, WDB Investment Holdings which was established more than 15 years ago to make investments in high growth sectors in order to generate income flow for the Trust.

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