Published: 29 October 2013

SEED Co Limited will raise enough funds to retire at least 17 percent of its debt from the sale of part of its stake to US seed firm Vilmorin Cie, financial analysts IH Securities have said.

Zimbabwe's foremost seed producer has agreed with the global seed firm for the acquisition of an effective 25 percent Seed Co stake to raise funds to support operations and retire its debt.

"It is our view that the increase in sales expected in the 2014 financial year, along with the unlocking of cash resources invested in inventory will result in Seed Co reducing some of its debt.

"With no equity investment, we estimate a 17,1 percent decline in Seed Co's debt to $38,8 million.

The impact of the reduction in debt levels on finance costs will be compounded by reduction in Seed Co's borrowing costs from 16,3 percent in to 12 percent in 2014," said IH Securities.

This is largely because the Zimbabwe Stock Exchange listed seed producer in financial year 2014 after the company accessed lower cost funding in second in the current financial period The two tier transaction will see Seed Co parent firm AICO Africa selling 15 percent of its majority to Vilmorin in first transaction and sale of another 10 percent batch in the second transaction.
- herald

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