RNS Number : 1768N
07 June 2010
("Lonrho" or the "Company")
Lonrho Agriculture acquires 51% of Oceanfresh Seafood (Pty) Ltd to expand the company operations into new markets including the USA
Lonrho Plc (AIM : LONR) is delighted to announce that Lonrho's agriculture division ("Lonrho Agriculture") has purchased 51% of Oceanfresh Seafoods (Propriety) Ltd, ('Oceanfresh') a leading vertically integrated producer and supplier of premium, sustainable seafood from Africa. The acquisition is aimed at expanding the operations of Lonrho Agriculture into new markets including the USA.
Established in 2000, Oceanfresh is the market leader in the supply of deep sea crustacean (lobsters and prawns) from Mozambique and a major supplier of premium finfish from South Africa and Mozambique. Oceanfresh operates a sustainable fishing model, fishing in regions that are well below agreed 35% sustainable fishing volumes.
The Oceanfresh operations consist of harvesting premium finfish and shellfish off the coasts of Mozambique and South Africa. Sourcing product mainly via third party contracted vessels the catch is processed at the Oceanfresh processing plant in Maputo, Mozambique. The processed fresh and frozen produce is marketed and distributed to existing customers in Europe and South Africa. The company has recently successfully completed a trial program to commence exports to the USA retail market with leading US retailer Costco. The support now available from Lonrho will provide the necessary resources to develop exciting new market opportunities
The existing management team will remain as significant shareholders in Oceanfresh and continue to run the day to day operations. Lonrho will take board control.
It is believed that significant operational and cost benefits to the Oceanfresh business will accrue through access to the agri-processing, handling and logistics network available within Lonrho Agriculture. Access to a competitive corporate funding structure, removal of expensive factoring agreements and access to working capital will improve margins and commercial opportunities.
The consideration paid by Lonrho for the 51% is a cash payment of R 3.8m (£ 336,860) for the equity, to be reinvested in the business, and Lonrho will arrange an initial working capital injection of R 7.7m (£ 682,642) to grow the business.
Loan facilities from former shareholders within Oceanfresh totalling R 9.5m (£ 841,550) will be subordinated and interest free, repayable with no fixed term based on a percentage of net profit achievement. Incentives and penalties relating to net profit achievements have been included into the agreement with the remaining minority shareholders together with commitments to further working capital based on growth targets.
Oceanfresh reported turnover for the past twelve months of R 78m (£ 6,900,000) with an EBITDA of R 3.5m. (£ 309.694)
David Lenigas, Lonrho Executive Chairman commented:
Lonrho is already active in the fish sector in South Africa and Namibia and sees this as a market with strong growth potential in both Southern Africa and internationally. The acquisition of 51% of Oceanfresh brings further skilled, sector specific, human resources and important access to product to Lonrho. The synergies between the existing Lonrho businesses and Oceanfresh should lead to increased margins and will provide Oceanfresh with access to realistically priced working capital enabling it to develop the business. The opportunities are already in place to expand the business, and to provide access to the USA marketplace for Lonrho's fish lines and other Lonrho Agriculture products. .