Padenga shareholders clear 100% acquisition of Dallaglio

PADENGA Holdings Limited shareholders have approved a 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.

The Victoria Falls Stock Exchange (VFEX) listed Padenga controls 51,1 percent shareholding at Dallaglio.

The consolidation of the diversification drive is largely expected to be value accretive to existing shareholders. The mining entity has assets that include Pickstone and Peerless mines, Giant Gold Mining Claims, and Blue Rock Claims.

Added to that, Padenga will enjoy a more robust balance sheet as a result of a larger capital base which would be able to be leveraged for capital raising.

During an extra-ordinary general meeting held on August 16, shareholders passed all resolutions on the agenda that include the acquisition of the remaining 49,9 percent of the issued share capital in Dallaglio following the acquisition of 50,1 percent of the issued share capital in Dallaglio in 2019.

The negotiated value of the acquisition of the 49,9 percent shareholding of Dallaglio is to be settled via an issuance of 253,003,361 Padenga ordinary shares that are listed on the VFEX to the Dallaglio minorities or their nominees.

At the meeting held on June 13 this year, Padenga board of directors considered and identified a potential opportunity for the restructuring of the Padenga group through the acquisition of the remaining 49,9 percent of the issued share capital in Dallaglio.

Through an EGM on August 16, the transaction was approved to be concluded via an issuance of 253,003,361 Padenga ordinary shares, translating to a value of US$45 million as at 4 August 2023, that are listed on the VFEX to the Dallaglio Minorities or their nominees in exchange for 8,982 ordinary shares in the Dallaglio Minorities.

Victoria Falls stock exchange

Stock broking firm, IH Securities said with the restructuring approved, there is going to be further improvement in the bottom line due to profits from the mining operations accruing value to shareholders.

“Padenga will benefit from a more robust balance sheet as a result of a larger capital base which would be able to be leveraged for capital raising,” said IH Securities.

“We expect the consolidated entity to register a revenue of circa US$169,62mn in FY23, an increase of 32 percent compared to same period last year.

“EBITDA is expected to grow 54 percent to US$49,61mn over the same period owing to expected economies of scale at Pickstone mine as production expands and the normalization of skins sales. As such, we expect EBITDA margin to inch up from 25 percent in FY22 to 29 percent in FY23,” it said.

IH Securities noted that the high-end exotic skin market is dominated by a small number of key players with the requisite technical skills, intellectual property related to tanning techniques and the appropriate infrastructure necessary to process large volumes of skins.

Padenga’s largest sales customer is currently TCIM, a French tannery based in Vivoin.

TCIM is one of the four tanneries owned by the HCP Group which in turn is a wholly owned subsidiary of the luxury brand house Hermès. “Padenga has concentrated on producing the size and quality of skin demanded by the HCP Group for supply to their principal and other top-tier luxury brands for use in the manufacture of high-end handbags and other fashion accessories.

“Tanneries worldwide are demanding improved quality forcing low-end producers out of production and ensuring that only the most efficient remain,” it said.

It added that tanneries are also moving towards long-term supply contracts with selected producers, such as that obtained by Padenga, and simultaneously demanding transparency and compliance in respect of sustainable husbandry practices and adherence to accepted animal welfare norms.

“Thus, any threat to Padenga’s supply agreement with TCIM could jeopardise Padenga’s entire skin business. Hence, by acquiring the rest of Dallaglio, the company achieves diversification from exposure to industry risk and reduces lower earnings volatility in the skins market. Financial synergy and potential for higher earnings potential Dallaglio presents Padenga with higher earnings potential,” said Padenga.

Padenga is one of the world’s leading suppliers of premium quality crocodile skins, accounting for nearly 85 percent of the supply of Nile crocodile (Crocodylus niloticus) skins to high end luxury brands globally.

Padenga also has the capacity to produce crocodile meat from its export approved abattoir for sale to European markets, and opportunities for the export of crocodile meat are being vigorously pursued.

The company operates three crocodile farms in Zimbabwe, which are located on the shores of Lake Kariba.-chronicle