Ariston share proposal gets the nod

Extraordinary Gen­eral Meeting held last Tuesday. The company will issue 888 888 889 ordinary shares of a nominal value of US0,1 cents each at a subscription price of US0,9c a share.
The ZSE-listed company recently said the shares would be issued on the basis of two ordinary shares for every one ordinary share held.
Having opened last Friday, the rights offer closes on March 23, 2012 and the results thereof will be announced by April 2, 2012.
About US$3 million raised would service debts, US$2,8 million will be allocated for working capital pur­poses and US$2 million for capital expenditure initia­tives. Capital projects would involve a restructuring and mechanisation exercise to operate at optimal levels of profitability. The working capital will go towards recapi­talising Favco to enhance its trading performance.
Additional expenses, amounting to US$400 000 relat­ing to underwriting fees, would be paid out as shares but this would not affect net cash proceeds.
If shareholders had rejected the directors’ proposal for the capital-raising initiative, the company would struggle to compete in the market due to a weak balance sheet.
Analysts said Ariston’s performance had been poor due to undercapitalisation, which saw all business units operating below optimal levels.
“We are hopeful that plans to increase production and attain critical mass will improve efficiencies and quality,” said one analyst.
“The group is well diversified in terms of production and geographical spread. At US$0,009 a share, the rights offer price comes in at a 36 percent discount to the US$0,014 current trading price.”
Afrifresh Group, one of South Africa’s top producers and exporters of citrus fruit and table grapes, recently bought 42 percent in Ariston. The company will also underwrite the rights issue. The SA firm is involved in farming, packaging, technical assurance, quality control, marketing, exporting and logistics businesses.
The diversified group also owns wine-producing and exporting company Africa Pride Wine, food exporting company Berfin and raisin producer Fruits du Sud.
In addition, the company owns 17 farming entities, which operate 22 farms and two independent pack houses in South Africa. It also has partnerships with more than 50 growers in various South African regions. It exports to 54 countries and has international offices in the Netherlands, the Czech Republic, Chile, Spain and China.
Last year, Standard Chartered Private Equity acquired a 30 percent stake in the Afrifresh Group, enabling it to instantly increase its farming asset base and continue its rapid growth.
Ariston operates three estates — Claremont, South­down and Kent. Claremont, located in Nyanga, is the country’s largest producer of pome and stone fruit. It is also the largest producer of trout and grows exotic flow­ers. Southdown, which is located in Chimanimani, has             1 200 hectares under tea, 60ha of bananas and 450ha of macadamia.
Kent, in Norton, produces vegetables on a 5ha green­house plot and poultry. Ariston also owns Favco, which distributes a wide range of fresh produce.