Senior Business Reporter
Over three quarters of Seed Co Limited (Zimbabwe) shareholders have accepted an offer for shares from sister company, Seed Co International Limited (SCIL) that will see the seed producer terminating its 25-year long dalliance with the Zimbabwe Stock Exchange (ZSE).
The board of SCIL, whose major shareholders are Vilmorin and Seed Co Zimbabwe, said retaining the latter’s primary listing on the ZSE, will not protect the value of equity holders of the regional group.
“The boards of Seed Co International Limited and Seed Co Limited wish to advise shareholders and the investing public that SCL shareholders constituting 78,08 percent of the issued share capital have now accepted the offer and surrendered their shares as of Tuesday 2 February 2021,” the firm said in a statement.
SCIL said it should be noted that despite the partial unbundling and separate listing of SCIL, the majority shareholding structure of SCIL continue to mirror that of SCL.
SCIL contends that its structure has certain peculiarities that put it at a disadvantage compared to other dually listed companies that are listed on the ZSE.
The regional seed giant, which is primarily listed on the Botswana Stock Exchange (BSE), said despite changes introduced by Treasury for stability and integrity of financial markets, it remained exposed to challenges of the local economy.
The peculiarities, a result of the make-up of the Seed Co Group, include the fact that SCIL only comprises operations outside Zimbabwe, unlike other dual-listed stocks, which are made up of international and Zimbabwean operations.
Further, SCIL said Seed Co Limited comprises only Zimbabwean operations and is only listed on the ZSE, which has been dogged by economic and currency volatility.
Zimbabwe has suffered from currency instability and high inflation until after June 2020, following its decision to switch a decade long use of a US dollar dominated multi-currency regime.
The SCIL board believes having only one of the entities, SCIL, on the Victoria Falls Stock Exchange (VFEX) trading in US dollars while leaving the other, Seed Co Zimbabwe, on the ZSE trading in local currency will not protect value for the shareholders.
Additionally, SCIL said the provisions and incentives captured in Zimbabwe’s SI 196 of 2020 have been designed to make the VFEX a platform for mobilising fresh hard currency capital for deployment mainly into Zimbabwean operations.
This would present challenges to SCIL with no underlying Zimbabwean operations, to justify raising any capital on the VFEX for deployment outside Zimbabwe.
SCIL’s board said these unfavourable prospects are likely to curtail the attractiveness of SCIL’s secondary listing on the VFEX with a negative effect on liquidity and price discovery to the detriment of investors, some of whom are pensioners.
In view of the issues above, and in pursuit of SCIL’s grand strategy of becoming a truly “African Seed company”, the board has proposed to bring the Zimbabwean operations of the Seed Co Group, which are held by SCL under SCIL.
In addition to this strategic pursuit, benefits of the proposed acquisition of SCL by SCIL also include the harmonisation of synergies and elimination of duplicated functions and associated costs.
Accordingly, the board has proposed that SCIL acquires the entire issued shares of SCL to make it a wholly owned subsidiary.
Thus SCIL wants to acquire up to 247 169 845 Seed Co Zimbabwe ordinary shares, constituting the entire issued share capital of SCL to be settled through the issuance of up to 252 223 526 new SCIL shares based on a swap ratio of 1 SCIL ordinary share for every 0,98 SCL shares held.