TIDMAGTA
RNS Number : 1927T
Agriterra Ltd
01 December 2011
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector:
Agriculture
1 December 2011
Agriterra Ltd ('Agriterra' or 'the Company')
Acquires Palm Oil Operation in Sierra Leone and
Raises US$15 million to expand African Agricultural
Operations
Agriterra Ltd, the AIM listed company focussed on the
agricultural sector in Africa, is pleased to announce a corporate
and operational update, which includes an acquisition and the
raising of US$15 million via a placing of new ordinary shares at
3p, a 32% premium to the current share price.
Overview
-- Raises US$15 million (before expenses) by way of a placing of
320,328,016 new ordinary shares of 0.1 pence each in the Company
('the Placing') to fuel expansion across pan-African agricultural
operations
-- Palm oil identified by the board as an attractive commodity
to complement Agriterra's current agricultural portfolio of cattle
ranching, cocoa buying and trading and maize farming and milling
operations
-- Acquires a lease of approximately 45,000 hectares of
brownfield agricultural land in an area suitable for palm oil
production in Sierra Leone
-- Placing proceeds to be applied to fund beef ranching business
with the objective of increasing the total herd size to 5,000 head
by 2012 and to 10,000 by 2015
-- Beef business to become "field-to-fork" producer - completion
of a 4,000 head per month capacity abattoir on schedule for
commissioning in Q2 2012
-- Intention to expand cocoa buying and trading operations
through establishment of a plantation business
-- Objective to become a major regional producer for the growing international cocoa markets
Agriterra Director Andrew Groves said, "We are a rapidly
expanding pan-African agricultural group centred on ranching and
maize processing in Mozambique and now palm oil and cocoa in Sierra
Leone. The US$15 million dollars raised at a significant premium
underpins the potential our investors see in the business and
endorses the progress that we have made. These new funds will be
allocated to rapidly expand our vertically integrated high margin
cattle business, in particular to increase the total herd size to
5,000 head by 2012 and to 10,000 by 2015, as well as complete the
expansion of our feedlot and abattoir projects. In addition, we see
huge potential in the cocoa market and have assembled a team
capable of delivering on our strategy of becoming a major regional
producer for the growing international markets through our trading
operations and the development of plantations. We feel that with
our experience of operating in Sierra Leone, the expansion into
palm oil through the acquisition of approximately 45,000 hectares
of brownfield agricultural land suitable for plantation, is a
natural step in our development, widening our commodity focus and
potential.
"We are extremely excited about the prospects of the Company as
a multi-project and multi-commodity group with financing in place
to achieve our rapid development plans as we remain focussed on
capitalising on the growing agricultural market in sub-Saharan
Africa and becoming a leading food provider. The potential upside
in our sector is considerable, supported by forecast global
demographic changes, and we believe we have a business that will
deliver value for its shareholders."
Further Information and Placing Details
Agriterra is a pan-African agricultural company with current
operations including cattle ranching, cocoa buying and trading and
maize farming and milling operations. The Company is broadening its
portfolio of agricultural products through the acquisition of
Shawford Investments Inc ('Shawford'), which in turn owns Red Bunch
Ventures (SL) Limited ('Red Bunch').
Red Bunch is a Sierra Leone company which holds a 50 year lease
(with an option to renew for a further 21 years) over approximately
45,000 hectares of brownfield agricultural land in the Pujehun
District in the Southern Province of Sierra Leone. This area of
Sierra Leone, which is close to the Liberian border, is suitable
for palm oil production. The region receives one the highest levels
of rainfall in Sierra Leone, which in itself, receives some of the
highest rainfall globally. In addition, the lease area is located
on the equatorial belt, which is the most favourable geographical
location for palm oil production. The Company intends to monetise
this landholding in the short term and clearing and planting is
expected to commence shortly. The Board believes that as the most
important and widely produced edible oil in the world, demand for
palm oil is projected to continue to grow, driven by demand in
Africa, India, China and the US, making it an important new target
of for Agriterra's ambitious investment strategy.
The consideration payable for the acquisition of Shawford will
be satisfied by the allotment 37,800,000 new ordinary shares of 0.1
pence each in the Company ('the Red Bunch Shares') which will be
issued contemporaneously with the Placing. A deferred consideration
of a further 37,800,000 may be issued in due course, subject to
certain planting targets being achieved.
The acquisition of Red Bunch complements Agriterra's wider
portfolio of established beef operations in Mozambique through
Mozbife Limitada ('Mozbife'), Tropical Farms Limited ('TFL'), the
Company's cocoa business in Sierra Leone and Desenvolvimento E
Comercializacao Agricola Limitada ('DECA') and Compagri Limitada
('Compagri'), the Company's maize farming and milling operations in
Mozambique.
The raising of US$15 million will enable Agriterra to maintain
its aggressive expansion plans across its portfolio, with
particular focus on Mozbife and TFL. Mozbife is rapidly expanding
into a vertically integrated beef business. In particular the
proceeds of the placing will be allocated to the expansion of its
breeding herd which currently stands at approximately 1,000 head of
prime Beefmaster cattle, and the completion of the 4,000 head per
month capacity abattoir, which will service both the Company's
slaughter needs and the region as a whole. Additionally capital
will be used to aggressively expand TFL's activities in Sierra
Leone, expanding the cocoa buying and trading operations, acquiring
additional land and building an extensive plantation business. The
board recognises the significant potential in the cocoa market and
the Company has assembled a team capable of delivering on its
strategy of becoming a major regional producer for the growing
international markets.
In addition, the Company announces that following the successful
integration into the group structure and the expansion of business
activities of its subsidiary, TFL, deferred consideration of
8,333,334 new ordinary shares of 0.1 pence each in the Company
('the TFL Shares') will be issued contemporaneously with the
Placing
The Placing is raising monies from existing and new investors,
including Beyond Africa Fund Limited, which will hold 10.08% of the
enlarged issued ordinary share capital following completion of the
Placing, and CIR Group, which will hold 8.06% of the enlarged
issued ordinary share capital following completion of the Placing.
Additionally and in tandem with the Placing, the Company has
granted Beyond Africa Fund Limited and CIR Group certain
conditional co-investment rights whereby the two parties may
provide finance, on a case by case basis, for the acquisition of
assets that the Board believe would enhance the Company's
development strategy. Companies controlled by trusts, the
beneficiaries of which include relatives of the Company's directors
Phil Edmonds and Andrew Groves, have subscribed for shares in the
Placing which will on completion of the Placing represent 5.04% of
the Company's enlarged issued ordinary share capital. Messrs
Edmonds and Groves are not themselves beneficiaries of the trusts
and as such their respective notifiable interests in shares in the
Company are unaltered.
The Placing Shares will represent 30.23% of the enlarged issued
ordinary share capital after completion of the Placing (and the
issue of the Red Bunch Shares and the TFL Shares), which will then
comprise 1,059,716,239 ordinary shares of 0.1p each.
The Placing is conditional on the admission of the Placing
Shares to trading on AIM ('Admission'). Application has been made
to the London Stock Exchange for the Placing Shares, the Red Bunch
Shares and the TFL Shares to be admitted to trading and it is
expected that Admission will occur, and dealings in such shares
will commence on 2 December 2011.
The Placing Shares, the Red Bunch Shares and the TFL Shares
will, when issued, rank pari passu in all respects with the
existing issued shares of Agriterra, including the right to receive
any dividends and other distributions declared following
Admission.
** ENDS **
For further information please visit www.agriterra-ltd.com or
contact:
Andrew Groves Agriterra Ltd Tel: +44 (0) 20 7408
9200
Jonathan Wright Seymour Pierce Ltd Tel: +44 (0) 20 7107
8000
David Foreman Seymour Pierce Ltd Tel: +44 (0) 20 7107
8000
Hugo de Salis St Brides Media & Finance Tel: +44 (0) 20 7236
Ltd 1177
Susie Geliher St Brides Media & Finance Tel: +44 (0) 20 7236
Ltd 1177
Notes
Agriterra Ltd is an AIM listed agricultural company with three
divisions: beef, maize and cocoa. Its cattle ranching business,
Mozbife, currently has a 2,350 strong herd, a land holding of over
16,000 hectares, a feedlot and an abattoir which is under
construction but will have a capacity of 4,000 head per month. In
addition to product from its own herds, it is anticipated that
throughput for these facilities will be supplemented using cattle
bought in from local communities.
The Company's maize buying and milling operations, DECA and
Compagri, are located in Chimoio and Tete in central and
north-western Mozambique respectively. These collect maize from
circa 350,000 farmers using the Company's own vehicle fleet,
process it into mealie meal, the African staple, and then sell it
back to the local market, into supermarkets and to the World Food
Programme. Combined sales for the year ended 31 May totalled 28,822
tonnes maize meal generating revenue of US$13.6 million.
Agriterra also has a cocoa business based in Sierra Leone,
Tropical Farms Limited, which is currently a buying and trading
operation, but provides an ideal conduit to branch out into cocoa
production in West Africa. Its strategy is to establish itself as a
secure, sustainable and traceable source of supply to meet the
requirements of the major cocoa consumers who are placing increased
emphasis in this area.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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