-- The external investment partner and the employee and education trusts
will receive long-term share participation rights, represented by shares in
parent company Cisco Systems Inc., with a value equal to a 25.1 per cent
stake in a newly created services organisation that will support the needs
of major South African organisations.
-- The employee and education trusts will receive share participation
rights with a value equal to a 25.1 per cent stake in Cisco Capital South
Africa, which offers financing to both Cisco's strategic customers and its
broader customer base.
-- Lastly, the employee and education trusts will receive share
participation rights, with a value equal to a 20 per cent stake in Cisco's
local sales and marketing organisation, which supports Cisco's broad
customer base in South Africa. Cisco products are already sold to this
customer base through system integrators that include a BEE-empowered
partner channel.
Black South African directors now make up 60 per cent of the local board of
Cisco South Africa, and 60 and 62 per cent of its senior and junior
management, respectively, consist of previously disadvantaged individuals.
Female employees today account for approximately 30 per cent of the
organisation.
"Unburdened by legacy technologies and entrenched ways of doing business,
developing nations have an unprecedented opportunity to benefit the
billions of people living in these geographies," commented Paul Mountford,
president of emerging markets for Cisco. "We believe that today's
transaction will underpin our efforts to support the South African
government in the continued transformation of the country's economy and, as
a result, is in the best interests of all our employees, partners and
shareholders in helping to grow our business."
Lereko Joins Initiative
Following a detailed selection process, Cisco is today announcing that
Lereko Investments Pty Ltd will participate in the empowerment initiative
by taking the lead equity stake with respect to the services organisation.
Lereko is represented by Valli Moosa (executive chairman), Popo Molefe
(CEO), and Lulu Gwagwa (executive director). The selection of Lereko was
made based on a common vision of BEE, cultural fit with Cisco, and a shared
vision for transforming the information and communications technology
sector in South Africa. Following the completion of the transaction, Lereko
will hold share participation rights with a value representing 20 per cent
of the services organisation, with the employee and education trusts
holding rights representing the remaining 5.1 per cent. A Lereko
representative will also be appointed to the advisory board of Cisco
Services South Africa.
"Cisco's support for the BEE initiative is a continuing step along the path
to help create an information based society that can leapfrog other
nations," commented Mark de Simone, VP Middle East and Africa for Cisco.
"South Africa truly embodies the opportunity for country transformation
that Cisco is working to foster through collaboration with African
governments."
Following the completion of the transaction, the investors will have voting
rights in the local entity and will receive the right to restricted shares
of the common stock of Cisco Systems, Inc. This asset will be of
equivalent value to the agreed stake in the local entity, and provides
access not only to the value of Cisco's South African operations but also
to the value of Cisco's businesses on a global basis. This holding may not
be disposed of prior to 2017 and is linked to the performance of Cisco's
business.
"Our motivation for transferring equity in our operations is simple: Cisco
believes participating in South Africa's monumental and transformational
Black Economic Empowerment (BEE) programme is not only a duty but a
once-in-a-lifetime opportunity as well," said Steve Midgley, general
manager, Cisco South Africa. "As it pursues new business opportunities in
emerging markets, Cisco is discovering that the birthplace of man and the
cradle of civilisation are, indeed, full of potential, just as they were
thousands of years ago. The leaps that emerging nations, including South
Africa, make now may very well benefit people there for decades if not
centuries to come."
Education Initiatives
Cisco is also announcing a "Cisco Scholars" programme that will be one of
several beneficiaries of the education trust. This programme will provide
scholarships for high-potential disadvantaged Black South African students
who are graduating from high school to attend the African Leadership
Academy.
The announcement today is one of several initiatives Cisco is undertaking
to support the objectives of the government. It also continues to build on
the achievements of the company to date in delivering on the BEE
requirements in respect to areas such as employment equity, skills
transfer, enterprise development and corporate social investment.
Cisco has also announced that it will intensify its local Cisco Networking
Academy efforts, which aim to address skills development requirements in
South Africa, and which recently received a commendation from the minister
of education. Over the coming year Cisco aims to add an additional 18
local academies, up from the current 52.
In order to further contribute to skills development, the local creation of
intellectual property, and employment creation, Cisco has also submitted a
proposal to the Department of Trade and Industry of nearly $15M of direct
foreign investment and an ongoing maintenance investment to the DTI, around
which negotiations are progressing very well, and the details of which will
be released shortly as agreement is reached.
About Cisco Systems
Cisco (Contact Information: Press Contact (RSA): Zweli Mnisi +27 11267 1175 zmnisi@cisco.com Press Contact (Emerging Markets): Felipe Lamus +1 919 392 9128 flamus@cisco.com Press Contact (Global Media) Marc Musgrove +1 408 525 6320 mmusgrov@cisco.com Industry Analyst Contact: Sharon Robinson +27 21 413 4577 sharobin@cisco.com Investor Relations Contact: Andreas Goldau +44 20 8824 8209 agoldau@cisco.com