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CFI deal fair — Rudland

Zimre Holdings Ltd’s majority shareholder Hamish Rudland says his company’s offer price to CFI Holdings’ minorities is a good and fair deal.

Chris Muronzi

“The price is fair and reflects the group’s net asset value. I think it’s a fair price given where the share price was last year. We want to build the company and recapitalise,” Rudland told businessdigest this week.

“Post the offer, it is quite a long way to go and we still have to build the milling and farming operations. We could, however, break even this financial year. If we can get enough shares to go for the rights issue, then the company will fly.”

On Facebook, Rudland, over the weekend, encouraged his friends to sell shares when the offer to minorities came through, promising a “mid-year Christmas gift”.

“Hi Friends, CFI holdings is opening an offer to the minority shareholders within the next few days, please dig in the archives and tell friends and extended family to look if they have shares. Follow the offer, as it will be a good offer,” Rudland wrote on his Facebook wall.

“If you were ever a part of Farmers Co-op you will probably have shares, as these were issued when the co-op was purchased by CFI in the 1980s. I will be putting a list of the current shareholders on line shortly, if you have lost share certificates please inbox me and I can advise. It may be a mid-year Christmas gift.”

ZHL, through its investment vehicle, Stalap Investments, offered to buy out minorities at 22 cents.

At the current Wednesday trading price of 16,8 cents, the offer presents a premium of 76%.

Currently, the stock is trading at a price-to-book ratio of 49%, showing the counter is trading at a discount of 51%.
An analysis of the CFI numbers shows minorities are getting a good deal as this brings the share closer to its book value of US$36 million as at September 30 2016 valuation.

When the Rudlands, through NMB Bank, underwrote the group’s US$15 million rights offer and got a significant equity stake in CFI, the company had a market capitalisation of around US$1 million.

The group had assets amounting to US$95 million in the full year to September 2016 and total liabilities of US$58 million, implying a book value of US$37 million. Its market cap as at September 30 2016 was US$6,3 million.

Stalap recently bought an additional 12,93% equity stake in CFI Holdings after Nssa sold 13,6 million shares at 10,55 US cents per share, bringing its total shareholding in CFI Holdings to 41,03% of the group’s total issued share capital.

In a circular to the market, Stalap has announced its intention to buy out minorities.

“The company would like to advise its shareholders and the investing public that it has received notice that its shareholder Stalap Investments (Private) Limited has acquired further shareholding in the company.

“This has taken the Stalap shareholding in the company to 41,03%,” said CFI company secretary Panganayi Hare in a statement last month.

A company which has acquired shareholding amounting to 35% of a company’s total issued share capital should make a compulsory offer to minority shareholders in line with ZSE listing rules.

“Section 9 (Note 1A) of the ZSE listing rules triggers certain obligations by any acquirer who reaches a threshold of 35 percent.

“Accordingly the company has begun instituting measures to ensure compliance with the ZSE listing rules,” said Hare.

But a big fight for the control of the group with Nicholas Van Hoogstraten has necessitated the latest move.

Should minoritities sell to Stalap, the Rudlands would be having control of CFI, a valuable but discounted asset on the ZSE.

As at June 30, CFI was trading at a discount of 51% to its book value with a market cap of US$17,8 million.

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