Omnia extends BEE share scheme to buy management time

Chemicals and fertiliser maker Omnia has extended its 12-year BEE share scheme after a sharp fall in its share price wiped out most of the scheme’s value to black staff.

The group launched its Sakhile 1 BEE vehicle in April 2007. By March 2018, 1,896 black employees were part of the scheme, which holds 10% of Omnia. However, by the time the scheme matured on April 1 2019, Omnia’s shares had dipped below R50 a piece for the first time in about 10 years amid mounting concerns about the company’s debt levels.

In 2014, the stock reached highs of about R240. Omnia’s shares were last traded at R35.18.

In its 2018 annual report, Omnia assumed that its share price on  April 1 would be R155.65. In that case, the average pre-tax gain per participating staff member would have been R227,970.

Omnia CEO Adriaan de Lange said on Thursday that since the scheme was linked to the group’s share price, it “has been impacted by the performance of the company ... As a result, the scheme has been extended to October 2019, which will allow management the time to find a resolution in the interests of the employees”. 

Management had informed employees of the extension, he said. 

Once Sakhile 1 has been finalised, management will look at implementing another employee share scheme aimed at “creating meaningful wealth for employees so that they value the partnership with the business”. 

Omnia said earlier in the week that it needs to sell R2bn worth of new shares “to ensure its long-term sustainability” after hefty losses in the year to end-March and a sharp increase in debt left it with a funding gap.

The group made a loss after tax of R407m in the year to end-March, from a profit of R664m the previous year.

As a result of the loss and higher debt levels — net debt rose to R4.4bn, from R2.5bn a year before — the group halted final dividend payments to shareholders.

The group’s net debt position, the result of acquisitions and the construction of a new plant, eclipses its current market capitalisation of R2.4bn.

hedleyn@businesslive.co.za