Ariston in $4m debt equity deal

HARARE - Agriculture concern Ariston is seeking shareholder approval to convert a $4 million debt into equity to allow the company to clean its balance sheet and raise more fresh capital.

In a notice to shareholders yesterday, the Zimbabwe Stock Exchange-listed firm said the deal will see its majority shareholder, Origin Global Holdings (Origin), increasing its stake from 72,74 percent to 76,52 percent.

“The shareholder debt-to-equity conversion achieves a full and final settlement of the shareholder loans, outstanding as at September 30, 2015, that the company was failing to service,” Ariston said.

“This will free the company’s cash flows and reduce the interest burden for Ariston and in turn, enhance the profitability of the company,” the agro-industrial firm added.

This comes as Ariston’s debt-to-equity ratio — inclusive of the shareholders’ loans of $5 534, 202 was 110 percent as at September 30, 2015.

But post-conversion of the shareholders’ loans to ordinary shares in the company as well as the waiver of interest, the debt-to-equity ratio of Ariston will improve to 52 percent.

“The transaction therefore provides enhanced equity support and comfort to the lenders, current and future. The combination effect of improved viability and enhanced equity support should support the efforts of the company in attracting suitable debt funding that is appreciative of the unique financing requirements of an agricultural concern,” Ariston said.

As such, Ariston shareholders would be required to approve Origin’s conversion of its $4 million debt into

222 200 000 shares at a conversion price of $0,018 at an extraordinary general meeting to be held in Harare on August 10, 2016.

Ariston is engaged in horticulture, tea, macadamia nut production, fishery, poultry production and supply of fresh farm produce.

The company is organised into three divisions, which include Southdown Estates, Claremont Estate, Kent Estate.

Southdown Estates is involved in growing and manufacturing of tea, macadamia nuts, avocados and bananas, while Claremont Estate produces pome and stone fruit, passion fruit, potatoes and trout fish.

In the full-year to September 30, 2015, Ariston posted a $1,7 million post tax losses from a $1,5 million profit during the prior comparative period the previous year.

The firm’s results demonstrated it had started laying the ground work ahead of the transaction, announcing the closure of its key trading unit, FAVCO.

FAVCO, one of the biggest traders in fresh produce, had been hamstrung by losses since 2009 when the country switched to the multi-currency system, with write-downs reaching a cumulative $72 million between 2009 and June 2015, as a volatile climate precipitated by falling commodity prices on the international markets leaned heavily against operations.

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