Padenga restructures operations for efficiency

Listed diversified company, Padenga Holdings limited, has restructured its operations after the approval by shareholders at an extraordinary general meeting (EGM) earlier in the week.

The company, which has operations in crocodile farming and skin selling, avocado farming and mining operations, has split the group into two divisions – agribusiness and mining.

Renowned businessman, Micheal Fowler, was given the mandate to steer the new bigger group’s future as the chief executive of the expanded Padenga Group, with its current chief financial officer Oliver Kamundimu, assuming the same role of the expanded group.

Gary Sharp will be the chief executive of the agribusiness division and a chief executive for the mining operations will be named when the transaction to acquire Dallaglio is completed, along with a separate board.

This comes after the company’s shareholders approved the motion to acquire the remaining 49,9 percent shares in Dallaglio Investments and gain full control as part of its scheme of reconstruction and restructuring.

If the deal falls through as planned, Dallaglio will become a wholly owned subsidiary of Padenga, and Padenga will remain listed on the VFEX.

According to a circular issued by Padenga, the transaction will be achieved by way of a share swap through the acquisition by Padenga of 8 982 Dallaglio Investments (Private) Limited shares.

This represents 49,9 percent of the equity shareholding in Dallaglio Investments (Private) Limited in exchange for the issuance of 253 003 361 Padenga ordinary shares listed on the VFEX and incorporated.

The negotiated value of the acquisition of Dallaglio is to be settled through the issuance of 253 003 361 Padenga ordinary shares that are listed on the VFEX to the Dallaglio Minorities or their nominees.

The group has indicated the transaction will result in the Padenga having full control of the mining business and its investments, resulting in the alignment of its operations with its objectives.

Since Padenga’s 2019 acquisition of a 50,2 percent stake in Dallaglio, there have been multiple positive developments within mining entity such as increased gold production, which has more than doubled, reaching 1,961 kg in 2022, up from 632kg in 2019.

Chairman, Bheki Sibanda, said Dallaglio’s profits would fully accrue to Padenga’s shareholders, potentially improving the company’s bottom line and therefore increasing its consolidated earnings per share.

“The proposed structure would result in Padenga having a larger asset base that could be leveraged for capital raising for expansion,” he said.

Extensive expansionary expenditure has been underway, and the gold price has been rallying, whose combined effect is expected to result in significant increases in profits over the next few years.

Meanwhile, Padenga is also considering abandoning the loss-making alligator skin operation in the United States, as this will allow the listed firm to focus on core businesses while also easing the burden the department has had on the group.

Said Sibanda; “The group successfully returned to profitability and will continue to focus on volume growth and profitability. Management will continue to closely monitor and preserve shareholder value.

Engagements with relevant regulatory authorities will remain a key focus area.”

Sibanda said Eureka Mine continued to contribute significantly to volume growth and profitability.

The crocodile farming division has undergone numerous challenges mainly relating to changing customer requirements as well as adverse market conditions.

“Strategies to return the business to optimal skin volume production, maximise skin sales realisations and re-enter the crocodile meat export market are bearing fruit and are expected to generate improved returns for the business in 2023,” he noted.

He said demand from the major brands for premium grade Nile skin remained very strong and Padenga was uniquely placed to capitalise on this situation, hence the continued investment into having an increased proportion of the skins produced qualifying for this grade quality.-ebusinessweekly