THE proposed unbundling of SeedCo in a dividend specie to existing shareholders and relisting of the entity on the Botswana and Zimbabwe stock exchanges will enable the company to raise money for its operations according to a reputable securities firm.
In a brief EFE Securities said the deal was likely to sail through as the major financing shareholder is already backing the deal.
Upon listing the unbundled entity will also issue 37,920,648 shares to their technical partner and major shareholder Vilmorin & Cie in a private placement at $0.5069 raising US$ 19.2m to fund the company’s regional drive.
Existing shareholders in the partial unbundling of ZSE listed Seed Co Limited will receive 71%via a dividend in Specie while Seed Co limited will retain 26 percent shareholding.
“Given the foregoing, though subject to shareholder approval, we expect that SeedCo will face limited hurdles to get approvals for these transactions, largely because the major financing shareholder is already backing the deal.
Further, there is no doubting the need to access a market were money can freely move to support growth in the company in regional markets. Our view is that there is value in this transaction to existing shareholders arising from the better valuation that the market is likely to place on the listed regional operations.
At a glance we believe SeedCo International Limited will trade at a minimum $0.5069 equivalent on the BSE. Based on the Old Mutual fungible stock’s premium of 141%, we anticipate SeedCo International Limited to trade at $1.2200 on the ZSE.
SeedCo Limited on the other hand had established a resistance level of $2.1000 on a Net Asset Value per share of $0.7700, consequently against a post unbundling NAVPS of $0.5600, we can estimate SeedCo’s price to rerate to $1.5200. Resultantly, the combined value to existing SeedCo shareholders on the ZSE post the unbundling coming up at $2.7500,” said EFE in its brief.
EFE said at the stock’s current value of $2.2000, investors have an opportunity to gain exposure ahead of this transaction while existing shareholders must support the transaction.