Zeder Investments unbundles Zeder Africa due to troublesome Zambian operation

Food Business Africa | 30 August 2022

Zeder Investments unbundles Zeder Africa due to troublesome Zambian operation

 

SOUTH AFRICA – Zeder Investments, a South African agribusiness group, is seeking to offload its subsidiary Zeder Africa which owns about 55.62% of Agrivision Africa to Zambian firm ForAfric Forestry Proprietary Limited for a considerable R160m (US$9.46m).

 

After strategic review, Zeder agreed that it was appropriate to divest Zeder Africa, as its core business – Agrivision Africa, has been a difficult investment for the firm due to the volatility of the agricultural landscape in Zambia and certain operational and macro challenges specific to the country over the past few years.

 

Before initiating this sale transaction, the investment firm listed on the Johannesburg Stock Exchange, claims to have made a commitment to improve the operational efficiency and reduce the debt of Agrivision Africa.

 

Agrivision Africa is a Mauritia based investment company focusing on the grain value chain. It currently has two main investments i.e., Agrivision Zambia and Mpongwe Milling.

 

Agrivision Zambia is a company focused on the acquisition, development and management of large-scale commercial grain operations, while Mpogwe Miling is a staple food manufacturer located on the Zambian Copperbelt.

 

The divestment comes after Zeder Investments offloaded its 98.22% stake in The Logistics Group (TLG), the old terminals arm of the fruit marketing giant Capespan – for R1.57 billion (US$92.8m) to Newlands-based African Infrastructure Investment Managers (AIIM). During the same time Zeder Investments unbundled its 42.2% stake in Kaap Agri.

 

Prior to that, the investment company offloaded all its 61.6 million shares, representing 32.1% stake held in Quantum Foods Holdings Limited, a JSE-listed feed and poultry products firm to Country Bird Holdings Proprietary Limited (CBH).

 

This was after it sold its entire 28.6% interest in Pioneer Foods to PepsiCo for a total consideration of R6.41 billion (US$375.85m).

 

The remaining Zeder’s portfolio represents strategic equity interests in leading organisations that span the agribusiness value chain.

 

This includes Zaad Holdings focused on importing and distributing a broad range of agri seeds and agricultural chemicals in Africa, Europe and other international emerging markets.

 

Through Agricol, Klein Karoo Seed Marketing and Gebroeders Bakkerit, it has a proud history spanning more than 50 years and currently exports to more than 100 countries.

 

In addition to that, Zeder Investments owns Capespan, an unlisted group with a history spanning more than 70 years.

 

Its core business activities are focused on the production, procurement, distribution and marketing of fruit worldwide.

 

It has an annual turn-over of over R4 billion (US$236m) and has operations in 11 countries, providing services and produce to more than 85 countries across five continents.

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JSE | 29 August 2022

ZEDER INVESTMENTS LIMITED

(Incorporated in the Republic of South Africa)

(Registration number: 2006/019240/06)

Share code: ZED

ISIN: ZAE000088431

LEI: 37890022AF5FD117D649

(“Zeder” or “the Company”)

 

 

CATEGORY 2 DISPOSAL ANNOUNCEMENT

 

 

1.   INTRODUCTION

 

     Shareholders ("Shareholders”) are advised that the Company, through its wholly-owned subsidiary Zeder Financial Services Limited (“ZFS”), entered into an agreement (“Agreement”) with Zeder Africa Proprietary Limited (“Zeder Africa”) and ForAfric Forestry Proprietary Limited (“Purchaser” or “ForAfric”), a company registered in the Republic of Zambia ("Zambia”), in terms of which ZFS will dispose of all of its shares in Zeder Africa, comprising 100% of Zeder Africa’s shares in issue (“Sale Shares”), to the Purchaser for a disposal consideration of R160,000,000 (“Disposal Consideration” ("Disposal”).

 

     The beneficial owners of ForAfric are Elrick De Klerk, Nicholas Marthinus Jansen van Rensburg, Pieter Jacobus Jansen Van Renburg, Duncan Dukhie and Beefco Holdings Limited.

 

2.   DESCRIPTION OF THE ASSETS

 

     ZFS holds 100% of the issued shares in Zeder Africa, being the Sale Shares. Zeder Africa holds 55.62% of the issued shares in Agrivision Africa (“Agrivision Africa”), an investment holding company incorporated in Mauritius with agricultural investments in Zambia. The principal activity of Agrivision Africa is the production and milling of agricultural grain produce in Zambia.

 

3.   RATIONALE FOR THE DISPOSAL

 

     Agrivision Africa has been a challenging investment for Zeder due to a number of reasons

     including, the volatility of the agricultural landscape in Zambia and certain operational and

     macro challenges specific to Zambia over the past number of years. Zeder’s focus over

     the past 24 months was on improving operational efficiencies and reducing debt at

     Agrivision Africa, and these actions have now enabled a clean exit from the investment

     on favourable terms. In this regard there is no provision for a downward adjustment of the

     Disposal Consideration and no representations, warranties or indemnities have been

     given by ZFS in favour of the Purchaser in respect of Agrivision Africa.

 

     The Disposal is consistent with Zeder’s strategic review and pursuant to the evaluation of

     approaches received by Zeder on various portfolio assets. The Disposal is part of an

     initiative to maximise wealth for Shareholders, should the opportunity arise.

 

4.   DISPOSAL CONSIDERATION

 

     The Disposal Consideration has been paid into an escrow account in cash and will be

     held in escrow until the closing date of the Disposal, subject to the fulfilment or waiver (to

     the extent legally permissible) of the Conditions Precedent, as defined in paragraph 6

     below, whereafter it will be released to ZFS.

 

5.   APPLICATION OF THE DISPOSAL CONSIDERATION

 

     As a result of limited opportunities in the sectors in which Zeder operates and to enable

     Shareholders to participate in the windfall proceeds, Zeder intends to distribute the

     majority of the Disposal Consideration to Shareholders once received, after payment of

     transaction costs and all directly related obligations.

 

6.   CONDITIONS PRECEDENT

 

     The Disposal is subject to the fulfilment or waiver (to the extent legally permissible), of the

     following outstanding conditions precedent (“Conditions Precedent”):

 

     -   that ZFS procures, and thereafter delivers to the Purchaser, the written consent to

         the Disposal of the applicable counterparties to material agreements in a manner and

         form, which is reasonably acceptable to the Purchaser. However, this Condition

         Precedent may be waived by ZFS; and

 

     -   the approval of the Disposal by the relevant competition authorities unconditionally,

         or conditionally on terms and conditions reasonably acceptable to ZFS and the

         Purchaser.

 

     The Conditions Precedent must be fulfilled or waived (to the extent legally permissible)

     by not later than 17h00 on 30 November 2022, which date may be extended by agreement

     between the parties in writing.

 

7.   EFFECTIVE DATE OF THE DISPOSAL

 

     Delivery and payment in respect of the Sale Shares will take place on the 15th business

     day following the date on which the Conditions Precedent are fulfilled or waived (to the

     extent legally permissible).

 

     The effective date of the Disposal is anticipated as being on or about 15 December 2022.

 

8.   FINANCIAL INFORMATION

 

     The value of Zeder’s interest in Zeder Africa included in Zeder’s latest published financial

     results comprising its audited consolidated annual financial statements for the year ended

     28 February 2022, was R146,000,000. These audited consolidated annual financial

     statements were prepared in terms of International Financial Reporting Standards (IFRS).

 

     The total fair value gain and dividend income attributable to Zeder Africa recognised in

     the aforementioned annual financial statements were Rnil.

 

9.   WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

 

     The Agreement contains representations and warranties by ZFS in favour of the

     Purchaser in relation to Zeder Africa only, and no representations or warranties or

     indemnities have been given by ZFS in respect of Agrivision Africa.

10. CLASSIFICATION OF THE DISPOSAL

 

   The Disposal constitutes a category 2 transaction in terms of the JSE Limited Listings

   Requirements.

 

 

Stellenbosch

29 August 2022

 

 Transaction Advisor to Zeder and Sponsor            Independent Joint Sponsor

               PSG Capital                                Tamela Holdings

 

 

 

 

      Transaction Advisor to ForAfric

        Pangaea Securities Limited

 

Date: 29-08-2022 08:00:00

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