SeedCo seeks alternative listing – DailyNews Live

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HARARE – Zimbabwe Stock Exchange-listed seed producer, SeedCo, is seeking alternative listing on a regional stock exchange to raise capital for its expansion projects.


This comes as the country is experiencing a crippling cash shortage that has left a black hole in the financial system that is crushing the rest of the economy.


The liquidity squeeze has left companies unable to pay their workers in cash and foreign suppliers, driving many out of business, and added to the ranks of more than three million people who have become economic exiles.


SeedCo finance director John Matorofa said the group’s board has already approved “a proposal to partially unbundle and list the external operations of the group on a regional stock exchange to raise capital for expansion and to fund growth opportunities”.


However, Matorofa could not be drawn to give out finer details of the new developments saying the company was still negotiating with its shareholders and regulatory authorities for approvals.


“We will publish a circular with full details in the first week of July this year,” he said.


SeedCo — one of the largest seed producers in Africa — operates in 15 countries across the continent and is eyeing growth


opportunities in Pakistan and India.


The group’s chief executive Morgan Nzwere recently said SeedCo conducted a pilot seed production in India and were satisfied with the initial results.


“The seed variety showed a lot of promise…we are now looking at producing more seeds there,” he told analysts last month.


Market experts said the decision by SeedCo to seek a secondary listing was prudent considering the current cash and foreign currency crisis that has seen many companies failing to service their external obligations.


Recently, Econet Wireless Zimbabwe was forced to launch a $130 million rights offer in an effort to settle its external debts.


The latest development also comes after SeedCo, recorded a 41 percent increase in profit after tax for the year ended March 31, 2017 to $20,7 million on the back of increased revenue emanating from a strong demand for maize seed.


The demand for maize seed was up in the financial year after government embarked on command agriculture to boost maize output.


SeedCo’s revenue was up 40 percent to $135 million from $96 million in the comparable period last year as a good rainy season spurred an increase in the demand for maize seed.


Finance charges increased to $4,1 million from $1,9 million in 2016 due to the discounting of Treasury Bills for cash in Zimbabwe and timing delays in payments by some regional governments, which led to extended borrowings.


As at the end of the financial year, SeedCo was owed $20 million.


Overheads were 22 percent up due to impairments of some receivable relating to the cotton seed business and increased distribution and marketing costs.

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