AICO unbundles

option to receive cash or get shares in Seed-Co, Olivine and Cottco.
If approved, the Aico structure would fall away.
Aico has a 100 percent stake in Cottco, its flagship subsidiary, 49 percent in Olivine Industries and about 50 percent in Seed-Co. Seed-Co is already listed on the ZSE.
Sources said the Industrial Development Corporation, the co-shareholder in Olivine with 51 percent, has agreed to the plan to have the firm listed on the ZSE.
“Pre-transaction consultations have been made and a financial advisor to the transaction has been appointed,” said one source who requested not to be named.
No comment could be obtained from Aico chief executive Mr Pat Devenish last Friday.
But he had hinted to the shareholders at its annual general meeting last Thursday that after the group failed to raise capital, the company was contemplating a series of transactions to unlock shareholder value and capitalise its subsidiaries.
He said the company would come back to shareholders for approval “in due course”. AICO is in desperate need of recapitalisation to reduce group-wide debt levels. The company also issued a cautionary statement, advising shareholders that the directors were contemplating a “series” of transactions to unlock and enhance shareholder value.
“It is envisaged that these transactions, if successful, will result in adequate capitalisation of the group’s operations. Accordingly, shareholders are advised to exercise caution in dealing with the company’s shares,” said Aico.
In a trading update, management reported that Seed-Co was in good shape, although the Government was lagging behind on its debtors’ payment. But the group is confident that the outstanding payment of US$14 million would be made.
Despite the price wars that occurred at the beginning of the cotton selling season, the season has progressed well and intake is up 30 percent to 50 percent from last year.
The division is expected to maintain its profitability at levels similar to  last year’s.
Olivine’s performance is substantially better, although the unit will need recapitalisation.
Scottco, the spinning unit was fully disposed of, while Exhort is still on the company’s books as interested bidders have failed to raise funding.