Zeder plans to raise R500 million

The company said it aimed to raise the cash to enhance investments and take advantage of other opportunities. Zeder has investments in 11 agricultural companies including Kaap Agri, KWV, Capespan Group, Suidwes Investments and MGK Business Investments. Five of its investments are equity accounted as it owns more than 20%.

The company would offer 370 million shares at 135c a share to raise the R500m. Its shares closed 5,19% up on 8 April 2009, at R142.

Simon Hudson-Peacock, head of specialist equity at Cadiz African Harvest Asset Management, said companies only offered rights issues at great discount to ensure that all shareholders followed their rights as holdings were diluted to such an extent shareholders felt obliged to take part in the offer.

This was also generally an option when cautious banks would not lend as they are risk adverse.

Investment manager Willem Meyer said the rights offer was below both the company's book net asset value, the intrinsic value of the shares it owned, and the net asset value based on market prices of the over-the-counter shares.

Its book net asset value per share increased 9% to R2,82 by the end of the period. Market-based value per share is R1,92, based on the unlisted market prices of its investments at the end of the period.

The proposed rights offer is expected to provide Zeder with “the necessary cash resources to pursue attractive identified investment opportunities”.

Zeder said it required a “fresh injection of capital in order to pursue certain identified investment opportunities that current market conditions have rendered attractive”.

This would include strengthening its position in some of its existing investments, such as KWV.

Meyer said the company, which was debt free, would not benefit from incurring debt as a result of its structure. He was confident shareholders, mostly institutional, would follow their rights.

PSG, the company's largest shareholder at 38,4%, was following its rights, which meant that R192m was already promised. And, as the company was going from 600- million shares in issue to more than 900-million shares, Meyer hoped that shareholders would follow their rights to avoid dilution of holdings.

He said the group had done well with its investments during the good times and now had an opportunity to benefit during difficult times.

During the year to February, Zeder subscribed for rights offers in Kaap Agri and Pioneer Food Group.

Zeder now owns 34,3% of Kaap Agri and underwrote R360m of Pioneer's rights issue. The company sold its Pioneer shares at a profit.

Source: Business Day

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