Zimbabwe: ZSE Delisting to Go Ahead - Seed Co

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19 FEBRUARY 2021Zimbabwe Independent (Harare)

By Shame Makoshori

DIRECTORS at the pan-African seed production empire, Seed Co group are going ahead with a planned
de-listing of its Harare headquartered unit, Seed Co Limited (SCL), according to a document obtained by
businessdigest.

The move follows a merger that was approved by shareholders holding a combined 78% of its stock.

The group operates through the Zimbabwe Stock Exchange (ZSE)- listed SCL and the Botswana domiciled
Seed Co International Limited (SCIL), which has been aggressively expanding since launching two
decades ago.

But as part of a consolidation plan that directors hope will unlock shareholder value, the group's assets
are being merged, with the local unit exiting the ZSE.

The combined assets will be listed on the foreign currency denominated Victoria Falls Stock Exchange
(VFEX), where SCIL is already quoted.

However, advisory firm, Imara, has warned that the deal may not benefit Zimbabwean investors.

Documents at hand show that Seed Co has re-engaged shareholders to assure them that the transaction
has several positive spin-offs.

After the new engagement, more shareholders are said to have accepted the consolidation plan during
the secondary offer, which will close on March 2.
"While in the short-term the situation in Zimbabwe is very fluid and therefore difficult to give concise
investment advice, in the medium to long-term, local investors, especially pension funds will benefit...
through holding an investment in a stable currency which pays foreign currency dividends," read part of
the document gleaned by businessdigest.

"The now legally allowable use of the US dollar in the economy has resulted in more sectors including a
USD component in their remuneration packages. This... should result in improved activity on the newly
created VFEX.

"SI (Statutory Instrument) 280 compels pension funds and insurance companies to invest the foreign
currency denominated collections in foreign currency assets and the VFEX provides them with such an
investment opportunity."

The group added: "The consolidation and introduction of new shareholders in SCIL ... is also expected to
stimulate share trading liquidity ... the board and management are exploring various options to
stimulate liquidity of the SCIL share."

SCL said after the closure of the secondary offer, it will then apply for voluntary delisting from the ZSE in
accordance with listings requirements.

Part of the requirements includes a circular to holders of the securities containing notice of the intention
to terminate the listing of the securities on or after the completion of the transaction.

The document further reads: "While it is not unusual that some investors may have a different view,
comfort is drawn from about 85% support received by way of acceptances to date ... the circular titled
Termination of Listing of SCL Shares on the ZSE gives notice of the intention to voluntarily delist... if the
offer is accepted by SCL shareholders to the extent that SCIL's shareholding in SCL reaches more than
70% or SCL has less than 300 shareholders."
It dismissed the notion that only Limagrain, the major shareholder, stands to benefit from the new
transaction.

However, Imara raised several issues over the fresh deal.

"ZSE will be setting a precedent for other listed companies with less than 70% of their shares in the
hands of the public to apply to delist," the advisory firm said.

Imara argued that a ZSE exit will prop the interests of offshore investors who have the forex to acquire
stocks on the VFEX, insisting that domestic investors would rather maintain a ZSE listing.

It pushed the ZSE to demand that Seed Co holds an extraordinary general meeting (EGM) before
delisting.

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