SEED CO is reducing its shareholding in Quton and is concluding discussions with an Indian partner that will take a significant stake in the entity, an official has said.
Seed Co wholly owns Quton.
Speaking at the company’s annual general meeting held yesterday, group chief executive officer Morgan Nzwere said he could not disclose the details of the partnership as the other entity was listed elsewhere in the world and has to go through its requirements.
“The equity partner will be taking below 10% of the market value of our business. It is a listed entity elsewhere and it is a strong company in the cotton seed business,” Nzwere said.
Nzwere said the transaction would see the partner bringing in new capital, the amount he was not at liberty to disclose.
He said a total $16 million had been collected from debtors since December 31 2013.
“In Malawi, of the $6,8 million outstanding at year end from the donor-funded programme, $5,3 million has now been collected and the balance is expected before August end,” Nzwere said.
“In Tanzania, the payments due from Cotton Development Fund of $4 million are progressing slowly, almost $0,5 million has been paid to date.”
He said traders in Kenya, Botswana and Tanzania had paid the bulk of the amounts due. Nzwere said the company’s borrowings, except in Malawi, were between 5% and 9%.
He said the kwacha borrowings were at 33% and the group was in the process of converting these to dollar terms.
Nzwere said demand for winter cereals seed had remained flat with increases in wheat being offset by reduction in barley, owing to the main customer holding carryover stocks.
“The problems affecting winter cereal production in Zimbabwe remain, with sustainable winter cropping funding and reliable electricity for irrigation the major challenges,” he said.
Nzwere said the company expects to receive $27 million before year end from its partner Limagrain and the money would be used to recapitalise the business.
He said the partnership with Limagrain was going on well and work on the five joint quick wins was progressing well.
“The second tranche of the equity from Limagrain totalling $27 million is expected before December. The second tranche of the Limagrain money is going to help with reduction in finance charges through liquidation of borrowings,” Nzwere said.
Limagrain bought over 20 million shares from Seed Co in January this year.