CDC, the UK’s development finance institution, has announced a $65 million investment in Zambeef Products, one of the largest integrated agri-businesses in Zambia.
This investment is to refinance company’s debt and to settle the RCL Foods put options.
Zambeef will raise 52,601,435 new Ordinary Shares at a subscription price of USD 0.18 per Ordinary Share and 100,057,658 new Convertible Redeemable Preference Shares, which are convertible into new Ordinary Shares, subject to certain exceptions, at a price of USD 0.555 per Convertible Redeemable Preference Share to CDC Group plc.
With this investment, CDC will have a shareholding of approximately 17.5 per cent in Zambeef’s Ordinary Shares and voting rights over approximately 34.85 per cent.
According to Dr. Jacob Mwanza, Chairman of Zambeef Products plc; “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.
This is a significant step forward for our Company and we are now in a stronger position than ever going forward. On behalf of the Board, I’d like to take this opportunity to thank CDC and all of our supportive shareholders and we look forward to delivering healthy shareholder returns over the years ahead. As per our interim announcement of 8 June 2016, the Board is pleased to report that the significant operational improvement and robust performance achieved in the first half has continued and we remain confident that we will meet market expectations for the full year and we look forward to updating the market on our progress over the coming months.”
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Specifically, proceeds of the fundraising will be used as follows:
- 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 USD 9.1 million;
- 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 USD 14.3 million;
- to refinance USD 38.2 million of the outstanding debt of the Group; and
- to finance all costs and expenses, of approximately USD 3.4 million, 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, edible oils, stock feed and flour. The Group also has large cereal row cropping operations and is also in the process of rolling out its West Africa expansion and its palm project.
