South Africa: Ariston Holdings to float $8 million (US) rights offer
The company will issue 888 888 889 new ordinary shares of a nominal value of US0,1c each at a rights offer price of US0,9c per share, on the basis of two ordinary shares for every one ordinary share held.
At least US$3 million will go towards debt restructuring. About US$2,8 million is for working capital at close to US$2 million for capital expenditure initiatives.
Capex initiatives will involve a restructuring and mechanisation exercise to operate at optimal levels of profitability.
The working capital funds will go towards Favco to enhance its trading performance. Additional expenses, amounting to US$400 000 relating to underwriting fees, will be paid out as shares and this will not affect net cash proceeds.
"If the rights offer is not implemented . . . Ariston will be unable to effectively compete in the market due to a weak financial position," said the company in an abridged circular to shareholder yesterday.
Shareholders will meet on Tuesday to consider the rights issue. Market analysts say Ariston's performance has been poor due to serious undercapitalisation, which saw all business units operating below optimal levels.
"We are hopeful that plans to increase production and attain critical mass will improve efficiencies and quality," said one analyst.
"The group is well diversified in terms of production and geographical spread. At US$0,009 a share, the rights offer price comes in at a 36 percent discount to the US$0,014 current trading price."
Afrifresh Group, one of South Africa's top producers and exporters of citrus fruit and table grapes, recently bought 42 percent in Ariston.
The company will also underwrite the rights issue. Its activities include farming, packaging, technical assurance, quality control, marketing, exporting and logistics.
It owns 17 farming entities, which operate 22 farms and two independent pack houses in South Africa.
It is also into partnership with more than 50 growers in various South African regions. It exports to 54 countries worldwide and has international offices in the Netherlands, Czech Republic, Chile, Spain and China.
Last year, March 2011, Standard Chartered Private Equity acquired a 30 percent holding in the Afrifresh Group, enabling it to dramatically increase its farming asset base and continue its rapid growth.
Ariston operates three estates -- Claremont, Southdown and Kent.
Claremont, located in scenic Nyanga, is the country's largest producer of pome and stone fruit. It is also the largest producer of trout and grows exotic flowers.
Southdown in Chimanimani has 1 200 hectares under tea, 60ha of bananas and 450ha of macadamia.
Kent in Norton produces vegetables on a 5ha greenhouse plot and poultry. Ariston also owns Favco, which distributes a wide range of fresh produce.
Source: allafrica.com
