Afrifresh injects cash for Ariston's US$8m Rights Offer

SOUTH Africa's AFRIFRESH Holdings (Private) Limited (Afrifresh) is injecting much needed cash as well as underwriting the US$8 million Ariston Holdings Limited Rights Offer.

Ariston is listed on the Zimbabwe Stock Exchange (ZSE) and last year made a shocking US$2 million loss due to bad business operations mainly in its agricultural subsidiaries in the Eastern Highlands.

The Ariston Board, currently led by prominent business personality and commercial farmer, Dr Robbie Mupawose, is prososing a US$8 million Rights Offer to recapitalise the company by way of a renounceable Rights Offer of 888 888 889 ordinary shares.

The deal was approved by shareholders in Harare on Tuesday at Royal Harare Golf Club where the company held an Extraordinary General Meeting (EGM).

The agreement between Afrifresh and Ariston was signed on February 14 where Afrifresh agreed to underwrite the offer in compliance with ZSE requirements.

"In recent years the Zimbabwean economy has faced a shortage of long-term finance, making the farming of longer cycle crops uneconomical," Dr Mupawose said.

"This has resulted in Ariston under-supplying the market and becoming inefficient from a capacity utilisation perspective. Ariston struggled in the last few years due to capacity under-utilisation, expensive short-term financing, aged equipment and labour constriants which have led to a reduction in the quality of tea and other fruits and, therefore, lower reurns.

"Without recapitalisation, the ability of the company to continue as a going concern is significantly doubtful."

Mupawose said his Board had therefore decuided to go for the Rights Offer and get new investors such as Afrifresh.

Listed on the ZSE in 1948, Ariston is an agri-industrial company operating five estates totalling 7, 864 hectares of land of which 3, 797 ha is arable land growing a wide variety of agricultural produce as well as supplying supermarkets with local and imported produce through its distribution company, FAVCO (Private) Limited.

The five estates are Southdown in Chipinge, which grows tea, and macadamia nuts, Clearwater in Chipinge, which grows tea and macadamia nuts, Roscommon in Chimanimani, which grows tea, macadamia nuts and bananas, Kent in Norton, operates poultry and livestock businesses and produces vegetables, and Claremont in Nyanga, which is a producer of pome and stone fruit, and is the largest producer of rainbow trout in Zimbabwe.

"FAVCO requires funding to enahnce its trading performance," Dr Mupawose said.

"Significant value is expected to be unlocked if the company is capitalised to the right levels to enable it to expand business to ensure higher profitability."

Ariston reported a net loss of US$2 022 008 during the nine-month period ended September 25, 2009 and as at that date, the Group's total current liabilities exceeded total current assets by US$669 648.

"The ability of the Group to continue as a going concern is dependent on the entity obtaining financing and the implemetation of effective operational strategies," said chartered accountants Deloitte and Touche International (Private) Limited in their report on the struggling ZSE-listed entity.

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