Home » Industry » Seed Co in U.S $24 Million Boost

Listed seed company Seed Co will receive the second tranche of about $24 million from Limagrain this week under an equity deal that was valued at $40 million, a senior company official said. The funding is expected to further reduce high finance charges that Seed Co has been incurring due to the huge debt on its balance sheet and support its expansion into the region.

Seed Co chief executive Mr Morgan Nzwere said part of the funding will go towards retiring the company’s debt, both domestic and foreign.

The other amount will go towards the company’s expansion initiatives in the region.

“The company will be receiving the second tranche of the capital from Limagrain and the money will be channelled towards retiring the existing debt that includes money used on the Malawi seed plant.

“This is going to be the game changer going forward. We expect the second of $28 million (from Limagrain) anytime this week,” said Mr Nzwere.

“Part of the funding will be used to retire the local debt of about $13 million.”

Seed Co was borrowed to the tune of $36 million last year.

Limagrain, through its unit Vilmorin amp Cie, first acquired a 15 percent stake in Seed Co – the first tranche of shares under the deal – after it was issued with 37,6 million shares and concurrently bought another 20,5 million shares, a portion of Aico’s stake in Seed Co through placement .

Vilmorin, however, paid 109 cents in the private placement which, according to regulations, was supposed to be exercised before December 31 leading to the injection $27 million into Seed Co.

Seed Co increased its shares in issue by 27 389 433 to cater for the call option which Limagrain’s Vilmorin amp Cie exercised to increase its shareholding to 33 percent.

This transaction has been critical for the company in its quest to venture into the regional market.

Seed Co has made strides in penetrating Nigeria, Kenya, Tanzania, Uganda and DRC. The group is also exploring opportunities in Ethiopia.

Seed Co already has footprints in Zambia and Malawi and has invested more than $25 million in external markets in the last three years, with close to half of the capital spent in Malawi on a seed processing plant with capacity to produce about 60 000 tonnes per annum at a rate of 160 tonnes a day.

Three years back, Seed Co opened a much bigger facility in Zambia and also commissioned a similar but smaller facility in Tanzania.

Mr Nzwere said the company is also looking at the possibility of making some acquisitions but negotiations are still at its early stages.

Seed Co has also disposed of a 60 percent stake in Quton to Mahyco due to viability problems associated with the sector.

Source : The Herald