SeedCo allays failed merger adverse impact fears

LEADING seed producer, SeedCo International Limited, says its planned merger that has failed to materialise will not have any adverse impact on SeedCo Limited, the group’s Zimbabwean subsidiary.

The group has abandoned its consolidation plans after the Reserve Bank of Zimbabwe (RBZ) recently turned down the proposal.

Responding to questions during a recent virtual analyst briefing, SeedCo International Limited group chief executive officer, Mr Morgan Nzwere, said the planned transaction was aimed at creating a bigger balance sheet for the group to finance its operations.

“The issue that the planned merger didn’t take place is not going to affect the Zimbabwe business at all,” he said.

“We wanted to create a bigger balance sheet on a stable stock exchange so that overall, the group is able to raise funding and some of the funds are deployed into Zimbabwe and other markets.

“But it doesn’t mean that Zimbabwe will fail to operate in terms of local facilities, we have got adequate facilities to fund that business. It’s not a forex-hungry business, it doesn’t require a lot of forex.”

During the financial year ended March 31, 2021, SeedCo International recorded a 26,2 percent spike in revenue to US$88,5 million compared to US$70,1 million achieved in the prior year. The group also recorded a 24,7 percent growth in maize seed sale volume at 38 300 tonnes compared to 30 700 tonnes in the prior year.

Gross profit for the group during the financial year under review was US$43,8 million compared to US$34,3 million in the prior year.

“The Zimbabwe business is still very big and profitable, it doesn’t require a lot of foreign currency,” said Mr Nzwere.

“At this stage we have just finished the major forex project that was needed, which is the maize seed drier that we did at a cost of US$12,5 million.”

He said their Zimbabwean subsidiary has also been able to do a lot of exports to countries like Malawi and Mozambique.

“That way we have been able to generate most of the forex that it needs for the business,” said Mr Nzwere.

The seed producer has re-listed on the Zimbabwe Stock Exchange (ZSE) following the cancellation by the group’s plans to merge SeedCo Limited with SeedCo International.

After the failed transaction, SeedCo International and SeedCo Limited will continue to operate as two separately listed companies, listed on the VFEX and ZSE, respectively.-chronicle.cl.zw