KAL Group Implements Innovative Share Incentive Hedging Strategy

  • KAL Group Limited implements a hedging strategy for its share incentive scheme.
  • The strategy aims to manage potential future obligations under the non-dilutive equity-settled long-term incentive plan (LTIP).
  • Investec Bank Limited is appointed as the third-party entity responsible for acquiring shares and delivering them to participants, effectively hedging KAL Group’s exposure.

KAL Group Limited, formerly known as Kaap Agri Limited, has unveiled a strategic decision to adopt a hedging strategy aimed at managing potential future obligations under its non-dilutive equity-settled long-term incentive plan (LTIP). The announcement, made in accordance with the terms outlined in a previous shareholder communication released on September 30, 2022, underscores the company’s commitment to responsible financial management.

Under the LTIP rules, awards granted to participants will be settled by KAL Group or its subsidiary, which will remit a cash amount equal to the purchase consideration for a specified number of KAL Group ordinary shares (“Shares”) to an independent third party. Investec Bank Limited, a reputable financial institution, has been selected as the third-party entity entrusted with acquiring the necessary Shares from the market and subsequently delivering them to the LTIP participants on behalf of KAL Group or its subsidiary.

The primary objective of this arrangement is to limit KAL Group’s exposure to the acquisition of Shares required for the LTIP awards’ settlement. By engaging Investec as a reliable third party, KAL Group seeks to effectively hedge against potential future obligations arising from the LTIP rules, thereby ensuring sound financial stewardship.

To maintain fairness in the Share acquisition process, KAL Group has established a maximum acquisition price of no more than 5% above the volume weighted average price of a Share over the preceding 30 trading days. This prudent approach allows for ongoing acquisition of Shares, contingent upon market volumes and availability.

The decision to implement a hedging strategy for its share incentive scheme reflects KAL Group’s steadfast commitment to fostering responsible financial practices while remaining dedicated to rewarding participants in the LTIP program. By enlisting the services of Investec, an esteemed financial institution, KAL Group endeavors to strike a balance between incentivizing its participants and prudently managing its exposure to future obligations.

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