Afrifresh seals Ariston deal

snapped up 185 776 659 shares at US1,1c, valued at US$2,04 million.
Afrifresh, the underwriters of Ariston’s US$8 million rights issue, are the major shareholders in the ZSE-listed company.
The rights offer closed on March 30, 2011 and the results of the exercise are expected next week followed by listing of the new shares.
Ariston issued 888 888 889 new ordinary shares of a nominal value of US$0,001 at a rights offer subscription price of US$0,009 on the basis of two shares for every single share held.
The deal accounted for 81 percent of the US$2,5 million traded on Wednesday from a total of 194 million shares.
The transaction was the third consecutive special bargain deal on ZSE, an indication that lack of liquidity in the market is initiating negotiated trades through special bargains.
Afrifresh is likely to increase its shareholding in Ariston if shareholders fail to follow their rights.
Due to serious liquidity challenges on the market, shareholders of most companies that had rights offers since 2009 failed to follow up their rights, resulting in underwriters getting significant shares in companies.
The highest subscription stands at approximately 70 percent.
Out of the US$8 million, Ariston said US$3 million will go towards debt restructuring, US$28 million for capital expenditure initiatives and about US$2 million for working capital.
Ariston has historically recorded a high level of fixed costs relative to the variable profit generated at each subsidiary level.
The group said it would address and rationalise the high fixed cost base through a restructuring and mechanisation exercise to operate at an optimum level of profitability.
Working capital funds will go towards Favco to enhance its trading performance.
The Afrifresh group is one of South Africa’s top producers and exporters of citrus fruit and grapes.
Currently, they export to 54 countries worldwide.
Ariston operates Claremont, Southdown and Kent estates. Claremont in Nyanga is the largest producer of pome and stone fruit. It is also the largest producer of trout and grows exotic flowers.
Southdown in Chimanimani has 1 200 hectares of tea, 60 hectares of bananas and 450 hectares of macadamia nuts while Kent in Norton produces vegetables on a 5hectare greenhouse plot.
The group owns Favco, which distributes a wide range of fresh produce, along with poultry.