AGRICULTURAL concern, Ariston Holdings has disposed its 50 percent stake in Claremont Orchards to a Dutch company, Tuinbouw Zonder Grenzen BV (TZG) for US$2 million in a transaction aimed at unlocking funding for expansion.

The deal dovetails with the Zimbabwe Horticulture Recovery and Growth Plan which is targeted at reconfiguring the horticulture industry driven by the private-sector.

Furthermore, under NDS1, strategies and interventions will be prioritised to revamp the horticulture sector through diversifying and scaling up production of emerging crops such as macadamia nuts, which have high demand on the export market.

Ms Acquiline Chinamo, the company secretary, in a circular to shareholders, said the transaction was granted exchange control approval by the Reserve Bank of Zimbabwe (RBZ) on 27 September 2021.

“TZG has offered and Ariston has accepted a total consideration of US$2 million for the 1 660 873 ordinary shares of US$0,001 par value each in Claremont all of which are issued and fully paid, and which constitutes 50 percent of the issued share capital of Claremont,” she said.

Prior to the transaction, Claremont was 100 percent owned by Ariston. Claremont currently owns Claremont Estate located at Lot 1 of Claremont in Juliasdale measuring approximately 1 590,3667 hectares.

The property comprises orchards with pome fruit and stone fruit of varying age profiles, fishery, a golf course and club house. Claremont produces Pome and Stone fruit for both the domestic and foreign markets.

On 27 May 2021 the board of Ariston resolved to dispose of the company’s 50 percent shareholding in Claremont after receiving an offer from TZG.

The Zimbabwe Stock Exchange (ZSE) listed agro-industrial concern said the rationale for the transaction was to unlock liquidity internally for funding the expansion of its Chipinge operations.

“The desire is to increase hectares under macadamia and avocado production without a capital call on shareholders and these two crops are produced for the export market and are lucrative,” she said in the circular.

However, she noted that establishment of both macadamia and avocado requires substantial capital as both crops take at least five growing years before going into production and during the growing years, input is required in the form of fertilisers and chemicals.

“On conclusion of the Transaction, it is envisaged that the operations of Claremont shall be administered by TZG and a third party in terms of a management contract for a period of twenty-five years at guaranteed returns.

“Further, funding required to expand the operations of Claremont will be provided through the management contract with no requirement for a capital call on Ariston or its shareholders.

“This arrangement will unlock liquidity and commercialise the operations of Claremont, thus increasing the output from Claremont as well as the net shareholder return,” Ms Chinamo said.

She indicated that the management contract will place responsibility for future capital requirements for Claremont on the third party appointed thereof.

She also added that Claremont requires further investment into more orchard development in order to achieve critical mass.

“The orchard development will be in the current product offering as well as new export product offerings suitable for the Nyanga climate.

“It is envisaged that over a period of three years, over US$5 million will be required for this purpose,” said Ms Chinamo.

She added that the structure of this transaction is such that there would be no capital call on shareholders for this purpose and this will allow the business to respond faster to the foreign markets where demand for macadamia and avocados is growing.

In its half year financials to March 31, 2021, Ariston revenue grew 64 percent compared to the prior period mainly by increase in sales of local products.

Cost of sales decrease at 37 percent was significantly behind revenue growth and reflects the impact of cost containment activities which resulted in gross margin improvement to 63 percent compared to 34 percent in the prior comparative period.

The fruit category’s production volumes of 2 288 tonnes for the current half year improved by 12 percent when compared with the prior comparative period.

This category comprises stone fruit and pome fruit. Both fruits registered growth of 17 percent and 5 percent respectively as yields continue to improve.