adminMartin Kadzere Senior Business Reporter
AICO Africa Ltd shareholders will meet at the end of this month to consider a series of proposals including a US$30 million rights offer and the sale of Seed Co’s 25 percent shareholding to a French-based company, Vilmorin & Cie, by the end of next year. Shareholders will also consider the unbundling of the group by collapsing the holding structure once the subsidiaries are recapitalised. Aico announced the intention to unbundle last year, with subsidiaries Cotton Company of Zimbabwe and Olivine Industries expected to list separately on the Zimbabwe Stock Exchange.
When the group structure is collapsed Seed Co will become a standalone firm.
The Aico group has a 100 percent stake in Cottco, which is its flagship subsidiary, 49 percent in Olivine and about 50 percent in Seed Co, which is already listed on the Zimbabwe Stock Exchange.
Cottco’s viability is largely being compromised by huge legacy debts while Olivine Industries requires adequate working capital.
In 2011, Aico Africa shelved the proposed US$50 million rights issue which was expected to recapitalise the subsidiaries.
The proposed rights issue, which was blocked by major shareholders, was also expected to retire debt and would have resulted in the restructuring of Aico’s loans.
“The meeting is for shareholders to approve or disapprove the proposal by the management to raise US$29 million through the rights issue, the sale of Aico’s stake in Seed Co and the unbundling of the group,” said one source close to the develop- ments.
“While proceeds from the disposal of Seed Co stake to Vilmorin would go towards recapitalising subsidiaries, particularly Cottco, and retire legacy debts, management is proposing to raise additional US$29 million through a rights offer.”
Last week, Seed Co shareholders approved the sale of the company’s 25 percent stake to Vilmorin & Cie in a deal worth US$60 million deal.
The two-tier transaction will see Seed Co’s parent firm Aico Africa selling 15 percent of its majority stake to Vilmorin in the first transaction and another 10 percent batch in the second transaction.
Simultaneously, as part of a call option share placement, Aico will sell a portion of its Seed Co ordinary shares, being 20 546 096 shares, at US$0,9925 per share, to realise US$20,39 million.
Provided the call option placement is exercised, Seed Co will have issued a total of 37 662 481 new ordinary shares to Vilmorin & Cie, for a total capital injection of US$40,11 million.
Efforts to get a comment from Aico chief executive Mr Pat Devenish were unsuccessful.
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