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Agriterra to net up to $50 mln from South Omo sale; will use cash to expand agriculture business

The Africa-focused agricultural business Agriterra is selling its legacy 20 per cent stake in the South Omo oil block in Ethiopia for up to US$50 million
Agriterra to net up to $50 mln from South Omo sale; will use cash to expand agriculture business

The Africa-focused agricultural business Agriterra (LON:AGTA) is selling its legacy 20 per cent stake in the South Omo oil block in Ethiopia for up to US$50 million.

Buyer Marathon Oil will pay US$40 million on completion of the transaction, which requires sign-off from the authorities and a waiver agreement from project partners Tullow Oil and Africa Oil. 

It will get the final US$10 million following a commercial oil discovery.

Agriterra will use the cash to fund a strategy of becoming a leading sub-Saharan food provider.

It currently has four key divisions: cattle ranching, maize farming and milling, cocoa trading and palm oil.  

Chief executive Andrew Groves said: "The sale of our legacy South Omo interest provides us with a dramatic cash injection.  

“As a result, the current market capitalisation of just over £50m does not fully reflect the considerable value of our growing agricultural businesses.

"The funds from this sale will enable us to realise our rapid expansion plans across all our agricultural businesses, effectively enabling the company to become a significant pan-African food producer and processor.”  

In Mozambique, Agriterra’s growth objectives include expanding its current beef herd from 4,000 to 10,000 head by 2015.

It is also developing a feedlot operation, 4,000 head per month capacity abattoir and butcher shops.  

In Sierra Leone, it will focus on cocoa trading, but is establishing plantations with the aim of becoming a significant regional producer for the growing international markets.  

The company’s coffers will be further swelled when it receives the US$18 million (£11 million) from the sale of its South Sudan oil asset.


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Article
December 12 2012

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