Lonrho buys stake in Oceanfresh

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Oceanfresh is a leading vertically integrated producer and supplier of premium seafood in 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.

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.

New opportunities

The company has recently successfully completed a trial program to commence exports to the USA retail market with leading US retailer Costco.

Lonrho believes that as a result of its support Oceanfresh will receive 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.

Funding growth

Another benefit of the acquisition for Oceanfresh is that Lonrho will also arrange an initial working capital injection of R7.7 million to grow the business.

Loan facilities from former shareholders within Oceanfresh totalling R9.5 million 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 R78 million with an EBITDA of R3.5 million.

Strong potential

David Lenigas, Lonrho Executive Chairman said, "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," the company said.