Seed Co Limited proposes 71 percent partial unbundling of Seed Co International

July 17, 2018
| Report Focus News

Harare – Seed Co Limited in a circular to shareholders on Tuesday said in order to unlock shareholder value and position the continental operations for growth, the Board is proposing to partially-unbundle 71 percent of Seed Co International.

The Group has over the years expanded into the region establishing itself as the “African Seed Company” and in the process flying the Zimbabwean flag with pride.

In recent years, the African Seed Industry has however started witnessing increased forays by multinational seed industry players attracted by the growing socio-economic stability on the continent.

These developments, on the continent now widely viewed as the last growth frontier, demand that the Group adopt and develop strategies to develop its turf and continue pursuing its “African Seed Company” vision leveraging its strong brand and in-depth knowledge of Africa.

It is against this background that the Company in a quest to defend the significant investment already deployed announced in a circular to Shareholders that post the proposed Private Placement to be carried out immediately after the unbundling, Seed Co Limited will retain 26 percent shareholding in Seed Co International.

“If approved by Shareholder, the Partial Unbundling will be achieved through Dividend-in-Specie distribution to all shareholders of 241 313 440 Seed Co International ordinary shares, on the basis of one Seed Co International share for each Seed Co Limited share held and duly registered as such on the Distribution Record Date.

“Seed Co Limited Shareholders registered as such on the Distribution Record Date will be entitled to receive share certificates reflecting the number of Seed Co International shares to which they are entitled pursuant to the dividend-in-specie distribution and shareholders with existing CSD accounts will have their shares credited directly on the CSD.

Seed Co International has expansion projects that require immediate funding amounting to $31 million.

Seed Co Limited said in order to manage leverage and the attendant financial risk, the Directors have resolved, subject to shareholder approval, to mobilize half of the required funding as permanent equity through the placement of 37 920 648 seed Co international ordinary shares for a subscription price of $0.5069 per share.

If approved by Shareholders, the Private Placement will have a dilutive effect of 10 percent to the post-Partial Unbundling shareholding structure of Seed Co International.

Seed Co Limited said the willingness by Vilmorin & Cie to financially support Seed Co International’s strategy demonstrates continued confidence in Seed Co Limited by the strategic partner.

“The 26 percent negative control to be retained by Seed Co Limited, together with the direct equity interests of the technical-equity partner, Vilmorin & Cie, in Seed International, will be part of a post-unbundling and Private Placement Seed Co International Shareholders Agreement by and between Seed Co Limited and Vilmorin & Cie.

Going forward, the Company said subsequent to the unbundling process and Private Placement, the Board is proposing to list separately Seed Co International on the Botswana Stock Exchange (Primary Listing) and the Zimbabwe Stock Exchange (Secondary Listing).

“In accordance with the BSE Listing Requirements and ZSE Listing Requirements, Pre-Listing Statements on Seed Co International will be issued to Shareholders and published in Botswana and Zimbabwe ahead of the listing immediately following Seed Co Limited Shareholder approval of the Partial Unbundling and Private Placement.

Seed Co International was incorporated in Botswana in 2000 and operates under the International Financial Services Centre regime of Botswana.

The proposed separate listing of Seed Co International will be preceded by a capital raise of $19.22 million through a placement of Seed Co International shares with Vilmorin & Cie SA, a related party, which in capital raise is meant to address the short to medium-term funding needs of the regional operations.