New Zimbabwe (London)

Zimbabwe: Seed Co Completes Mega Deal

SEED Co Limited on Thursday completed its transaction with French international field and vegetable seed developer Vilmorin & Cie after a special deal worth above US$7 million was pushed through the local bourse.

Seed Co Ltd last year approved a US$60 million deal which will see Vilmorin & Cie acquire a 25 percent equity stake in the local company by the end of the year.

The deal is regarded as one of the biggest on the Zimbabwe Stock Exchange since dollarisation.

The rationale for the transaction was to increase Seed Co's breeding, research, training and development expertise while also availing fresh and appropriately priced capital to finance growth in new and existing markets, particularly in East and West Africa.

The company's circular to shareholders indicated equity capital amounting to US$40,1 million will be raised through the issue to Vilmorin & Cie S.A of up to 37,7 million new ordinary shares at a subscription price per share of US$0,9925 immediately after the EGM, subject to regulatory approval.

The first phase of the transaction, according to the circular, focused on placement and Aico Africa Ltd sale by 31 December 2013, where 10 273 048 ordinary shares, representing 5 percent of Seed Co's issued share capital being offered for cash at a subscription price of US$0,9925, to raise equity amounting to US$10,196 million.

Seed Co would benefit from joint research board and activities, germplasm exchange, technology transfer where the partner will provide field trials and bursaries, molecular market analysis, among other things.

Financial benefits of the transaction will see US$20 million going towards expensive debt reduction with potential savings of US$3 million per annum in finance costs.

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