CDC, the UK’s development finance institution, has agreed to invest $65m in Zambeef Products, one of the largest integrated agri-businesses in Zambia, to refinance company’s debt and to settle the RCL Foods put options.
Zambeef will issue 52,601,435 ordinary shares to CDC at a subscription price of $0.18 per share and 100,057,658 convertible redeemable preference shares at a price of $0.555 per share.
Upon complition of this transaction, CDC will have a shareholding of approximately 17.5% in Zambeef’s ordinary shares, and voting rights over approximately 34.85%.
Jacob Mwanza, Chairman of Zambeef Products, said: “I am delighted that CDC is becoming a supportive long-term shareholder in Zambeef plc. We have a longstanding relationship with them and they have a long history of making successful investments in our Country, including plenty within the agricultural and food sectors.”
“Through the issue of these new shares we are able to finance the purchase of RCL Foods’ outstanding equity stakes in both Zamhatch and Zam Chick, refinance a significant amount of our debt, as well as provide additional working capital to accelerate the roll out of our new macro outlet stores,” he said.
The proceeds of the fundraising will be used to finance in cash the company’s obligation to acquire RCL Foods’ shares in, and all claims whether on loan account or otherwise against Zamhatch pursuant to the Zamhatch put option up to an amount up to $9.14m; and to finance in cash the company’s obligation to acquire RCL Foods’ shares in, and all claims whether on loan account or otherwise against Zam Chick pursuant to the Zam Chick option up to an amount up to $14.25m.
In addition the proceeds will be used to refinance $38.2m of the outstanding debt of the Group and to finance all costs and expenses incurred by the company and CDC in connection with the proposed transaction.
Following completion of this transaction, Zambeef will free up its internally generated cash flow in order to finance provide general working capital and to accelerate the roll out of the company’s new Zambeef macro outlet stores, which were a key strategic priority of the Group during the last year.
The Zambeef Group is principally involved in the production, processing, distribution and retailing of beef, chicken, pork, milk, dairy products, eggs, stock feed and flour.
The Group also has large row cropping operations (principally maize, soya beans and wheat), with approximately 8,120 Ha of row crops under irrigation and a further 8,480 Ha of rain-fed/dry-land crops available for planting each year.
The Group has operations in West Africa (Nigeria and Ghana), as well as developing a palm project in Zambia.
Zambeef is dual listed on the Lusaka Stock Exchange and AIM, a sub-market of the London Stock Exchange. Source: Asoko Insight