In South Africa AGT Foods represents the retail, hospitality, spices, ingredients, popcorn, bakery and protein divisions as well as Pouyoukas Foods.
Fairfax has agreed to subscribe, on a private placement basis and subject to certain conditions, for preferred securities in a maximum aggregate amount of C $190 million. The preferred securities will be unsecured obligations, will mature in 99 years and will be guaranteed by certain of AGT’s subsidiaries.
AGT has also agreed to issue a maximum of 5,714,286 warrants, each exercisable into one common share in the capital of AGT and exercisable at C $33.25 per share. Each warrant will be exercisable within seven years. AGT can also elect to require early exercise of the warrants if the five-day volume weighted average closing price of its common shares reaches C $53.20 at any time after the fifth anniversary of the closing.
Fairfax will have the right to nominate one independent director to the board of directors of AGT and will become entitled to nominate an additional independent director upon the exercise of all of the warrants. The proceeds raised from the Fairfax transaction will be used by AGT for immediate repayment of debt, future growth initiatives and general corporate purposes.
“Fairfax has an exceptional track record in global emerging markets and is an ideal partner for AGT, as we look to grow our business and pursue our long-term goals,” commented Murad Al-Katib, AGT’s president and CEO. “We are excited about this new relationship and look forward to working with the Fairfax team, as we explore new strategic growth opportunities.”
The transaction significantly improves AGT’s balance sheet by providing attractively priced and near-permanent strategic capital. Management views this as a material de-levering event that equips the company with the necessary liquidity for its current and future growth needs.
“AGT is well positioned to capitalise on the long-term growth trajectory from population and income growth in emerging markets. Fairfax is the right partner for us in the next stage of development of a strong and diversified AGT,” concludes Al-Katib.
