Push for EGM before Seed Co delisting

-February 16, 2021

BY SHAME MAKOSHORI

ADVISORY firm Imara has urged anxious clients not to hurry and offload shares in the delisting of agro-
technology outfit Seed Co Limited (SCL), saying the Zimbabwe Stock Exchange (ZSE) should insist that an
extraordinary general meeting (EGM) be held before SCL’s exit.

Imara has become the lone voice publicly warning against the SCL exit, which may sail through next
month after shareholders constituting 78,08% of the issued share capital accepted an offer to be
swallowed up by its Botswana-listed offspring, Seed Co International Limited (SCIL).

The advisory firm says delisting will only prop the interests of offshore investors at the expense of
Zimbabweans, who will struggle to purchase SCIL shares once it switches to the forex-denominated
Victoria Falls Stock Exchange (VFEX) after exiting the ZSE.

In an analysis of the transaction obtained by NewsDay Business at the weekend, Imara said the ZSE
should not set a wrong precedence by allowing a de-listing to sail through without shareholder approval
in line with its previous demands.

“Under ZSE rules, Seed Co Zimbabwe can apply for a delisting if there are less than 70% of its shares held
by the public,” said Imara.

“In the recent past, the ZSE has made it very difficult for listed companies to delist and has required such
companies to call an EGM to do so. It would then require 75% of the remaining investors to approve a
delisting. This is not always easy. Should the ZSE break with tradition and decide not to insist that Seed
Co undertakes an EGM and allows the delisting to take place, then the ZSE will be setting a precedent for
other listed companies with less than 70% of their shares in the hands of the public to apply to delist.
This would further shrink the availability of shares on the ZSE,” said Imara.
The advisory firm added: “Current publicity coming out of the Seed Co group is mischievous in our view
as it suggests that the merger and delisting is a ‘done deal’. To avoid being invested in a delisted Seed Co
Zim, which would become in effect a private company, shareholders are submitting their shares to SCIL.
We are resisting that and would suggest that other investors who would rather not sell their shares hold
on to them. Should SCIL reach over 90% of the shares, they will then likely compulsorily acquire Seed Co
Zim under the existing Companies Act. Should SCIL fail to acquire 100% of Seed Co Zim, then Seed Co
Zim will remain listed and available for Zimbabweans to buy. It would be good news for Zimbabwe and a
relief for domestic investors and the ZSE.”

Two weeks ago, SCIL said the firm would delist following an overwhelming response by shareholders to
its primary offer.

A second offer has been made to remaining minorities, and will close on March 3, after which SCIL can
invoke provisions of the Companies and Other Business Entities Act to squeeze them out.

“Following the subsequent publication of the secondary offer, the board of SCIL wishes to advise
shareholders and the investing public that SCL shareholders constituting 78,08% of the issued share
capital have now accepted the offer and surrendered their shares as of Tuesday February 2, 2021,” said
SCIL.

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In accordance with the ZSE listing requirements, SCIL will proceed to cause SCL to apply for voluntary
delisting from the ZSE upon the closure of the secondary offer on March 3, 2021 and procurement of
regulatory approvals.

“Consequently, once delisted, any remaining SCL shareholders will not be able to trade their shares
freely in the absence of a public market platform and an easily determinable reference price.
Shareholders and the investing public are reminded of SCIL’s strategic plan to achieve full consolidation
of SCL on successful completion of the acquisition transaction,” it said.

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