Home » Business » Seed Co Completes Vilmorin Transaction

Seed co completed its transaction with Vilmorin amp Cie after a special deal worth just above $7 million was pushed through during ZSE trades yesterday. A special bargain of 7 149 407 at 99,25c was conducted in the counter by brokers Inter Horizon selling to Imara completing the sale of the now unbundled Aico’s stake to Vilmorin amp Cie.

The transaction was the second tranche of shares amounting to 10,14 million which were to be sold on the open market at 99,25c to raise at least $10 million. The other 3 million shares were already moved in March.

The first tranche involved the sale of 20 546 096 Seed Co shares to Vilmorin amp Cie for a total consideration of $20,392 million.

All in all, the deal was a capital raise of $50,1 million which allowed Cottco to repay its debts guaranteed by Aico as part of the group’s unbundling.

There was also a special deal by Inter Horizon securities of 5,87 million shares worth $5,57 million which sources say were bought by Vilmorin.

Analysts have said that with the completion of the transaction there is need for congruence between the interests of Seed Co’s minority shareholders and that of Vilmorin.

Failure for such a convergence will see Vilmorin benefiting more at that opportunity cost than Zimbabwean shareholders. This could happen if Vilmorin only sees Seed Co as its marketing agent and distributor for its products in Africa, limiting its growth in RampD which in this industry is the cornerstone for future business growth.

“This partnership should see the exchange of ideas between researchers of both companies and ultimately the transfer of technology. This will add value to Seed Co and create more opportunities for its business growth,” said market analyst Mr Jerome Negonde.

For the half-year ended September 30 2013, which traditionally is a slow period, Seed Co posted an after-tax loss of $12,8 million, which was 44 percent higher than the same period’s loss previous year.

Revenue for the period under review went up by 30 percent from the previous period to $17 million as the group witnessed an increase in winter cereals seed and maize seed.

This was influenced by early sales to niche markets in the cotton and tobacco sectors.

Seed Co’s gross margins also rose by a marginal 3 percent from the prior period’s 36 percent and the group says it expects them to further improve in the second half of the financial year. This is the period when the selling season picks up.

The group also registered a slight increase in their current assets from $116 million in March this year to $119 million in the period under review despite a 31 percent reduction in accounts receivable.

Management highlighted that Seed Co’s borrowings went up by 50 percent largely owing to payments made for current year seed production as well as delayed receipts from major customers.

Source : The Herald

Archives