Seed Co to repay $20 mln debt, losses balloon to $12.8 mln

Seed Co to repay $20 mln debt, losses balloon to $12.8 mln

HARARE, November 7 (The Source) –  Seed Co will use $20 million from the private placement deal with British firm, Limagrain to retire expensive debt, which will cut interest charges by up to $3 million annually, a company official said.

Last week the company’s shareholders approved a $60 million private placement deal which will see Limagrain taking up a 25 percent shareholding in Seed Co through its subsidiary Vilmorin & Cie.

Aico Africa would also get $20.4 million through the partial sale of its Seed Co stake to Vilmorin & Cie.

The 38 million shares to be acquired by Vilmorin & Cie, the fourth largest seed company in the world will give it a 25 percent shareholding in Seed Co .

“When the whole amount comes, we will spend $20 million towards expunging expensive debts,” Seed Co chief executive, Morgan Nzwere told analysts on Wednesday.

“At 10 – 15 percent interest rates per annum, we can save between $2.5 million to 3 million.”

He said some of the money, which is expected in January next year  would be used to complete the company’s $6 million factory in Malawi, acquire a farm and set up processing plants in East and West Africa.

The company’s liabilities for the half year to September stood at $97 million up from $76.8 million in March this year.

Among its debtors are governments of Zambia and Zimbabwe which had since paid $8 million towards their debts.

President Robert Mugabe’s ZANU-PF party owes Seed Co $13 million, which accrued through quasi-fiscal activities during the four-year tenure of the unity government with Movement for Democratic Change formations.

Seed Co said the debt has been inherited by Treasury.

“When we engaged the finance minister after the elections, his assurance was they are in the process of bringing it (the debt) into mainstream government,” said Nzwere.

He said recently the government issued a tender for 16 000 tonnes of maize seed, the majority of which was supplied by Seed Co.

“We received a substantial order from government where they paid 15 percent deposit and will pay 10 percent on delivery and the balance in three installments,” he said.

Meanwhile, the company’s loss position worsened to $12.8 million for the half-year ended September 2013,   from the $8.9 million loss incurred last year attributed mainly to provisions for bad debts.

Turnover for the period was up 30 percent to $17 million from $13 million driven largely by improvement in the uptake of winter cereals whose volumes increased to 3500 tonnes from 2600 tonnes last year.

Operating expenses went up 29 percent to $16.8 million from $13 million attributed to provisions for doubtful debts including the $3.1 million locked up in Interfin bank currently under curatorship.

Finance charges went up 18 percent to $3.9 million from $3.3 million.