AGRO-INDUSTRIAL concern Seed Co Limited is seeking shareholder approval for the disposal of 25% plus one share to United Kingdom-based Vilmorin & Cie’s that will enable the firm to raise $40,1 million for the company to retire short-term debt and recapitalisation.
VICTORIA MTOMBA
Under the proposed transaction, Vilmorin & Cie’s will get the shares on a private placement that will be completed next year, with the first batch due at the end of the year.
The 25% plus one share means that Vilmorin has voting rights even if it’s not a major shareholder.
According to a circular released by the company yesterday, the transaction will be carried out in two phases.
The first phase will see Seed Co sell 5% to Vilmorin, while the company’s parent company Aico Limited will also dispose off 10% that it holds in Seed Co.
“On conclusion of Tranche 1 Placement and the Aico sale, the strategic global partner will control approximately 15% of the issued share capital of Seed Co.
“The strategic global partner will pay a non-refundable deposit of $2,9 million, being 10% of the total consideration payable under Tranche II. On fully exercising the call option in respect of Tranche II placement and following the Aico sale, the strategic global partner will control approximately 25% of the issued share capital of Seed Co,” said the company in the circular.
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Seed Co in the statement revealed that it aims at reducing an expensive debt valued at $7 million, $6 million will be used for the construction of a factory warehouse in Malawi, while a farm will be acquired in Zambia for own production at $6 million.
The company will channel $8 million towards equipping operations in Ethiopia and West Africa as it is not commercially viable to export to these far-off markets.
“Overall, the level of Seed Co’s capital base is therefore a key success factor in achieving growth in the short and medium term. The equity to be raised will support the sustainable realisation of the company’s mission on the continent and play a significant role in satisfying the growing demand for food in the world,” the statement reads.
