New Zimbabwe (London)

Zimbabwe: AICO Seekers Investor for 49pc Stake

AICO Africa plans to engage a new foreign investor to take up 49 percent shares in the Cotton Company of Zimbabwe (Cottco) after shareholders on Friday passed a resolution to recapitalise the business, a company official said.

"We got one interested party who has been waiting for these resolutions to be passed and we expect to hear from them in the new year," chief executive, Patrick Devenish told The Source after an extraordinary general meeting (EGM).

"The discussions at Cottco will begin fairly soon. There is a crop in the ground and so it's an attractive time for an investor to come on board."

The resolutions passed included fundraising to capitalise Cottco to pave way for the unbundling of the parent company, AICO.

Devenish said the value of the stake has not been discussed yet but said Cottco had a market value of between $40 million and $50 million.

I would think they want up to 49 percent. With regards to the value, it's not us who set the price but the market," he said.

Shareholders also approved warehousing the company's 49 percent shareholding in Olivine Industries in a trust pending its disposal.

AICO is still scouting for an investor for its shareholding in the company estimated to be worth $10 million.

"We have had numerous enquiries and we signed over 130 non-disclosure agreements. I am optimistic that in the new year someone will come forward," Devenish said.

Government and AICO each hold 49 percent in Olivine Industries with the remainder being held by the Industrial Development Corporation.

The company has been failing to procure adequate raw materials due to shortages of working capital.

Meanwhile, the proposed technical equity partnership between another division, Seed Co and Vilmorin & Cie SA was approved and will result in a $60 million private placement deal which will see British firm, Limagrain taking up a 25 percent shareholding in Seed Co through its subsidiary Vilmorin & Cie.

AICO Africa would also get $20.4 million through the partial sale of its Seed Co stake to Vilmorin & Cie.

Shareholders also approved the company's name change from AICO Africa Limited to Cottco Holdings Limited.

AICO has been struggling due to undercapitalisation as evidenced by the $17.1 million loss that the group posted from operations in its half year results to 30 September, which was six percent lower than last year while the loss after tax from continuing operations was at $27.1 million.

The group expects current fundraising initiatives to anchor its recovery.

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