ESTHER MSETEKA, Lusaka
ZAMBEEF Products intends to raise US$65 million in new capital once it acquires 100 percent shares in both ZamChick and ZamHatch.
On Thursday, shareholders approved a deal that will allow the company buy the shares in both ZamChick and ZamHatch at a cost of US$23 million pending approval from regulatory bodies.
At an extraordinary general meeting, the shareholder heard that the company would further reduce its debt levels and fund capital investment plans, and also lessen Zambeefâ€™s exposure to exchange rate fluctuations.
Recently, Zambeef Products applied to both Common Market for Eastern and Southern Africa (COMESA) Competition Commission (CCC) and Competition and Consumers Protection Commission (CCPC) on their intended merger for purpose of approval.
The company has opted to pay for the ZamHatch shares in cash, which has been raised through the issue of new ordinary shares and convertible preference shares to the worldâ€™s oldest development finance institution, CDC Group Plc (CDC).
Under the transaction, CDC is investing US$65 million in Zambeef, that is, US$9.5 million in return for 52.6 million ordinary shares and US$55.5 million for 100 million convertible redeemable preference shares.
The investment gives the institution a 17.5 percent stake in Zambeef, which is listed on both the Lusaka and London stock exchanges.
The ZamHatch hatchery and Zam Chick broiler divisions were set up as joint ventures between Zambeef and RCL Foods in 2013, with Zambeef holding 49 percent of ZamHatch and 51 percent of ZamChick.
Under the agreement, RCL of South Africa had an option to sell its shares back to Zambeef for cash or Zambeef shares equivalent to US$14.25 million for RCLâ€™s stake in ZamChick and US$9.126 million for ZamHatch while the â€˜putâ€™ option is exercisable on or before September 23, 2016.
Commenting on the development, Zambeef chairman Jacob Mwanza said: â€œWe thank all our shareholders for their continued support for Zambeef. It is a measure of CDCâ€™s confidence in Zambeef, its management and business model that one of the worldâ€™s most well-respected and prudent investment houses has opted to invest in the company.â€
ESTHER MSETEKA, Lusaka