Acquisition of land and Increase in Profit Share

RNS Number : 0005K

Obtala Limited

04 July 2017

 

04 July 2017

Obtala Limited

("Obtala", the "Group" or the "Company")

(AIM: OBT)

Acquisition of land at Magole Farms and Increase in Wami Farms Profit Share

·     Acquisition of 195Ha land and processing assets at Magole Farms for USD492,000

·     New lease of that 195Ha land at Magole Farms to give Obtala increased profit share

·     Renegotiated equity and profit share on 1,200Ha Wami Farms

Obtala Limited (AIM: OBT), the African focused agricultural and forestry company, is pleased to announce it has entered into an agreement to acquire, via a newly incorporated 49% joint venture, the underlying 195Ha agricultural land at its Magole Farms operation, currently leased to Obtala's 75% owned subsidiary Montara Continental Limited ("Montara Continental"). It is intended that the newly acquired land will be subject to a new lease giving Montara Continental an increased effective 94.9% profit share in the agricultural operation at Magole Farms. In a separate transaction, the joint venture that operates the 1,200Ha Wami Farms has been renegotiated, increasing Montara Continental's equity and profit share from 70% to 90%.

Magole Farms

Magole Land Limited ("Magole Land"), 49% owned by Montara Continental, has acquired the underlying 195Ha agricultural land at Magole Farms for a total cash consideration of Tanzanian Shilling (TZS) 1.1bn (approximately GBP380,000/USD492,000) paid for by Obtala, subject only to completion of registration formalities. It is intended that the newly acquired land will be subject to a new lease to a company 90% owned by Montara Continental with the 10% balance owned by Magole Land, giving Montara Continental an effective 94.9% profit share in the agricultural operation near Morogoro, Tanzania.  Obtala currently operates the farm under a long-term lease with over 30 years remaining. As part of the transaction, Montara Continental's ownership in the processing assets will increase from 80% to 100%.

Wami Farms

Obtala has reached agreement with its private, non-related Tanzanian joint venture partner, which will see Montara Continental's equity and profit stake in the joint venture, which leases over 1,200Ha of farmland near Morogoro, increase from 70% to 90% for a nominal cash consideration.

Commenting on the transactions, Miles Pelham, Chairman of Obtala said: "Magole Farms and Wami Farms are the pillars of our agriculture project in Tanzania so it is naturally pleasing to secure ownership of our processing assets and increase profit share from our historic and future investment. As we announced in April, we intend to invest US$10m over the next five years in Tanzania under the 'Grow Africa' initiative, and these land deals will ensure our shareholders receive a significantly increased interest in the value returned from these investments."

Obtala Limited Miles Pelham - Chairman Paul Dolan - CEO www.obtala.com	[phone]
ZAI Corporate Finance Limited (Nomad) John Treacy / Ray Zimmerman	[phone]
Brandon Hill Capital (Joint Broker) Jonathan Evans Beaufort Securities Limited (Joint Broker) Gavin Burnell / Jon Belliss	[phone] [phone]

This announcement contains information which was previously inside information for the purposes of Article 7 of the Market Abuse Regulation EU Regulation 596/2014. 

 

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