The Reality - 5 years down the line.
Shares are coming out of the lock period.
The the board of directors at Phuthuma Nathi decided not to list the shares on the JSE. (this is abnormal rather strange).

No broadcasting or advertising to increase media and potential black investors awareness.

They instead decided to launch there own trading platform.

They only notified share holders a few weeks ago about the independent trading platform.
None of the share holders had any idea what the share was worth.
Proof of this was in the yearly statements they sent out to all share holders.
Bearing in mind that 98% of all share holders was individuals with very little or no knowledge how to read a balance sheet let alone stock trading.

98% of all share holders did not cast yearly votes
As we all know only 15% of black South Africans trade on the JSE. (45% foreign traders and the balance white South Africans)
Therefore at least 97% of all current share holders have little or no knowledge about share trading.

Only a few share holders was made aware of the estimated price as predicted by the nine independent analyst. Notification was sent via email 5 working days before trading commenced. That means that a potential 95% of the voters had no knowledge of the fair value of the shares.

After many emails and many months trying to persuade the directors of Multichoice to have independent financial companies value our stock and send the info to the share holders they refused to listen.
A few days ago they sent out emails indicating that the had independent valuations done on the shares. None of the 120000 shareholders was notified as the majority don't have email accounts and up till today none of them know what the true value of the shares are worth.

They claimed that the share holders voted and gave them a yes to proceed, but we know that 90% of share holders have no little or no knowledge about share trading platforms.
Share holders trusted them when they said they can expect a potential 31 times the value on investment. Share holders believed that government and the stake holders was acting in good faith. They trusted the system.

Proof of trader ignorance started on opening day. Average valuation by the independent analysts was R130.00 but shares were trading at between R10.00 and R50.00. Bearing the above in mind the share was valued at R50.00 Five years ago.
Phuthuma Nathi Shares (Multichoice shares) have doing extremely well, and have been performing at an average of 20% compounded over the past 5 years. As I am writing this page the Phuthuma Nathi shares opened on R22.00 t9 December 2011.

Share holders could not deposit money in real time we had to wait 2-3 days before money could be cleared to our accounts. But shares was traded today.

Bank account details was incorrect on the share trading platform. Therefore shares could not be snapped up at pennies to the pound. Especially if you could not make a deposit in real time.

With bank details being incorrect (in my book this was done on purpose) you had to hold on for hours to get assistance only to realize somebody cut you off on the other side of the telephone line.

The public therefore has the right to know who bought the first +/- 5 million rand shares.

Who allowed the privy elite to electronically transfer funds 2-3 days before the time.

Also note that Phuthuma Nathi 2 was trading at an average of R30 per share.(These are investors who invested the larger sums into the scheme. Whilst Phuthuma Nathi 1 was trading at an average of R25.00 as at 13.10 pm on the 8 December 2011.

If any of us had invested our money in Naspers 5 years ago at R136.00 We could have cashed out a year ago at R409.00 providing a 300% return on investment over 4 years. Plus full dividends. Or we could have invested in Ten cent at +/- R20.00 per share and cashed out a few months ago or even today @ R150.00 per share a return of 750% - 800%

I can list many other investment opportunities, instead we went with Multichoice and Sasol, believing that these companies with such great track records will deliver cometh the hour.

I have no doubt that the directors of the Phuthuma Nathi share scheme purposely decided against listing on the JSE. Purposely with held critical information from share holders.  prevent public interest. Because if they had to get media attention like they did with the launch in 2006 the share price could have gone close to fair share value.

They knew come December you will have a flood of cash strapped share holders
selling off shares and the sharks (black elite) will be lying on a beach with laptop in hand buying up these shares at pennies to the pound.

This is not Black Empowerment this is Minority Black Elite Enrichment at the
expense of the poor.

Bearing in mind the interest by having 67.5 Million Shares at R10.00 = R675 Million tied up for a minimum of 5 years in a bank account. Some of the dividends received by Phuthuma Nathi from Multichoice was used to pay off the debt to Multichoice for the shares. Plus the tax saving from this scheme. Naspers could claim the R40 per share (R50 - R10) as a form a taxable expense (subject to a maximum of R3000 per annum per new shareholder). See the info here http://www.econobee.co.za/bee-articles-and-information/econobee-articles/the-multichoice-phuthuma-nathi-bee-deal.html

If you take the R11.00 that was paid through dividends, the interest on the 675 Million plus the initial investment made by share holders to purchase the share. The value or our input should easily exceed R30.00 per share. The value of Multichoice almost tripled over the past 5 years. However shares are trading at an average of R24.50. This is criminal.

By implementing this type of scheme Naspers/Multichoice had substantial benefit: In the end the scheme may end up costing Multichoice nothing. They will also profit from the fact that they are becoming a lot more BEE compliant.

An excellant deal for Naspers/Multichoice from a BBBEE viewpoint.

The Welkom Share Scheme (Media 24) have done so badly it is now worth less than 80% of share value.
Estimated at R50.00 per share 5 years ago. Today's estimate - R10.00 per share.
Bought at R10.00 per share (5 years ago). No return on investment. Not even the 5% that banks offer.
Investors can understand that shares will increase or decrease in value. But surely why sell an already dying cow to investors.
Where were the financial analysts that could have guided buyers.

Sasol launched a BEE campaign at a time when the price of oil was trading at +/-$140.00 a barrel. If you do a bit of research you will discover that many reputable financial commentators said that the oil bubble must burst.
Why was Sasol allowed to declare an inflated share value??
Some BEE investors bought Sasol at a supposedly discount price of R350.00 although the share is trading at +/-R390.00 on JSE. Whilst BEE share holders can only sell at R260.00
The shares was locked for two or three years.
That means that black investors are losing at least 35% on initial investment.

Do any of these companies deserve a BEE Rating?????
Where is our Government?

Where are the people that initiated these schemes??

Why should a BEE share trade at 35%-85% less than fair value:

This is Stealing from the poor.

This incompetent bunch should be brought to justice.

A total disgrace that every single one of the above BBBEE initiatives have failed I am sure there are many others.

Lastly SABC special assignment had a program last night about Black Fishermen that was extremely hard done by BEE Deals. The list goes on and on. We also know that certain black elite are enriching themselves at break neck speed, world records are being set here in South Africa how certain individuals have enriched themselves at the expense of the poor. We the people, fought alongside these individuals during the bad old days of apartheid, we are frustrated. We are getting angry by the day. If Egypt could overthrow a corrupt government so can we please help STOP THIS CORRUPTION. 

The entire Egyptian economy was in a pathetic state, many lives was lost, many dreams was shattered.

Do not become part of this problem that is silently brewing right on our doorstep.

Millions of other Black South Africans (directly and indirectly) poured life savings into BBBEE deals because they trusted government and all the major stake holders.

Declare Share Trading on Phuthuma Nathi 1 and 2 as NULL and VOID. Close down the trading platform until further investigation.

Let us Unite and get 10000 investors to sign a petition and flood all the email boxes of those concerned with our grievances. My email address below.

Below I provide a potential Solution:

The best alternative would have been to auction Phuthuma Nathi Shares after the lock period. (Google did this a few years ago before listing to give the man in the street the advantage over the Old Boys sitting at the New York Stock Exchange). With a reserve of R82.00 or something similar.

Alternatively if no buyers could be reached government could have stepped in and requested that banks guarantee the shares at a minimum of R50.00 The value that was issued 5 years ago. Bearing in mind MultiChoice tripled in value over the past 5 years.

Was one of the best performing stocks on the JSE even during the recession.

This would have paved the way for cash strapped investors to make small loans.

As you may know government has been assisting black entrepreneurs and if we take one sector like farming, 95% failed and or the business is not profitable.

At least with the Phuthuma Nathi shares they would have the backing of a company with a proven track record instead of the billions that have gone to waste.

I also understand that banks make loans against shares from Blue Chip companies.

Omar Ebrahim - webmaster@rebirth.co.za