Last checked at 23 Oct 2009 07:00
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector: Agriculture
23 October 2009
Agriterra Ltd ('Agriterra' or 'the Company')
Raises $5.1 million to Expand Beef Ranching Operations & Strengthens Board
Agriterra Ltd, the AIM listed company focussed on the agricultural sector in central and southern Africa, announces that it has conditionally raised approximately $5.1 million (before expenses) by way of a placing of 63,950,000 new ordinary shares of 0.1 pence each in the Company ('the Placing Shares'), with new and existing shareholders at a price of 5 pence per Placing Share ('the Placing Price') ('the Placing'). The funds raised will be used to expand the Company's cattle ranching and feedlot production business, through its subsidiary Mozbife Limitada ('Mozbife'). This expansion is aimed at capitalising on the growing demand for beef in sub-Saharan Africa and at adding value to the Company's portfolio of businesses operating in the African agricultural sector, including two significant grain processing facilities in Mozambique. To strengthen the Company's Board, Euan Kay, who has managed the Company's subsidiary Desenvolvimento E Comercialização Agricola Limitada ('DECA') for the past five years, will join the Board as an Executive Director with immediate effect.
The Company's aim is to expand the 1,000 hectare Movonde Stud Ranch and develop and stock the recently acquired 20,000 hectare Dombe Ranch with pedigree Beefmaster breeding livestock imported from South Africa. It is the Board's intention to increase Agriterra's total herd from 720 head today to some 10,000 head in the next three years. The Dombe Ranch has been identified as an attractive site due to the grazing quality, good access to irrigation and its close proximity to the Company's grain processing facility in Chimoio, whose by-products from the milling process can be used in part to feed the herd. Agriterra has also acquired a 200 hectare property in the environs of Chimoio where an abattoir and feedlot business will be constructed using some of the proceeds of the Placing.
Agriterra CEO Andrew Groves said, "Our objective with Mozbife is to grow a substantial cattle ranching business capable of processing 5,000 head of cattle per annum in the next two years. The construction of a feedlot business and abattoir in the vicinity of both of our current ranches provides us with the ability to rapidly expand our cattle business without the additional costs associated with transport of feed or animals. In conjunction with this, costs will be further controlled by way of integration with our maize business at Chimoio, as the bran residue which is a by-product of milling makes ideal cattle feed.
"The maize operations at Chimoio and Tete continue to perform well. Chimoio achieved a record buying season with a total of 34,000 tonnes of maize purchased from local growers. In addition, we have made significant progress at our second maize processing facility in Tete, which has acquired some 7,000 tonnes of maize since commencing operations in May 2009. Development costs to date have been primarily funded from internal cash flow and any further CAPEX we foresee will be funded by revenue generated from our DECA and Compagri grain processing businesses.
"I am delighted to welcome Euan Kay to the Board, whose insight and support has been invaluable since we shifted our strategy to focus on the agricultural sector last year. I look forward to his increased involvement and benefiting from his considerable business and industry acumen in growing Agriterra into a leading agri-operator in sub-Saharan Africa."
The Placing Shares will represent 11.9% of the enlarged issued share capital, which will then comprise 537,771,554 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 to be admitted to trading and it is expected that Admission will occur, and dealings in the Placing Shares will commence on 28 October 2009.
The Placing 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.
Euan Alastair Kay (aged 52) currently holds or has held the following directorships and partnerships in the last five years:
| Current Directorships and Partnerships | Directorships held in the last five years |
| EAK (Pvt) Limited | |
| Eastern Air Private Limited | |
| K & K Construction (Pty) Limited | |
| Polylining Zimbabwe (Pvt) Limited | |
| Drystone Enterprise Propriety Limited |
Mr Kay owns no shares in the Company but has been granted options to subscribe for 2,500,000 shares in the Company at a price of 3 pence per share, exercisable between January 2010 and January 2014.
There are no further disclosures to be made in relation to Euan Kay pursuant to Schedule Two, paragraph (g) of the AIM Rules for Companies.
** ENDS **
For further information please visit www.agriterra-ltd.com or contact:
| Andrew Groves | Agriterra Ltd | Tel: +44 (0) 845 108 6060 |
| Jonathan Wright | Seymour Pierce Ltd | Tel: +44 (0) 20 7107 8000 |
| Hugo de Salis | St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |
| Susie Callear | St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |
Seymour Pierce Limited, which is regulated by the Financial Services Authority and is a member of the London Stock Exchange, is acting as nominated adviser and broker exclusively for the Company in connection with the Placing. Its responsibilities as the Company's nominated adviser under the AIM Rules are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or any other person in respect of his decision to acquire ordinary shares in the Company in reliance on any part of this announcement. No representation or warranty, express or implied, is made by Seymour Pierce Limited as to any of the contents of this announcement for which the Directors and the Company are responsible (without limiting the statutory rights of any person to whom this announcement is issued). Seymour Pierce Limited has not authorised the contents of, or any part of, this announcement, and no liability whatsoever is accepted by Seymour Pierce Limited for the accuracy of information or opinions contained in this announcement or for the omission of any material information. Seymour Pierce Limited will not be offering advice and will not otherwise be responsible for providing customer protections to recipients of this announcement in respect of the Placing or any acquisition of shares in the Company.