Former Zambeef CEO Francis Grogan’s relationship with Zambeef remains strong following the company’s disclosure that he along with John Rabb, who are both related parties to Zambeef, will be supplying approximately 2823 cattle in 2020.
“Zambeef, the fully integrated food producer with operations in Zambia, Nigeria, and Ghana, announces the following related party transactions involving Non-Executive Director, Mr. John Rabb, and the former Chief Executive Officer, Mr. Francis Grogan, over cattle purchases for the calendar year 2020”, read a statement issued by the company’s Sponsoring broker, Pangaea Securities Limited, on 12th May 2020.
Both John and Francis have interests in the two companies named to be among the suppliers of cattle. “Mr. John Rabb is one of a class of beneficiaries in Sussex Trust, an organisation that owns 100% shareholding in Wellspring Ltd (“Wellspring”) and Mr. Francis Grogan is a 50% shareholder in Chisamba Ranching and Cropping Ltd (“CRC”)”.
Due to Zambeef’s dual listing, the disclosure of John and Francis being among the suppliers is a requirement according to LuSE and AIM rules under the clauses that govern conduct with related parties. In this particular case, due to their Non-Executive Directorship in the company, this is a necessary requirement. “The cattle supply agreements with Wellspring and CRC fall to be treated as related party transactions pursuant to the AIM Rules for Companies (“AIM Rules”). The Directors of Zambeef, other than Mr John Rabb, having consulted with Strand Hanson Limited in its capacity as the Company’s Nominated Adviser for the purposes of the AIM Rules consider that the terms of these cattle supply agreements to be fair and reasonable insofar as shareholders are concerned.”
According to the published statement, the two companies will be contracted to supply cattle to the Company commencing in April 2020 (and ending December 2020), as they have done in previous years”. In 2019, both companies supplied a total of 2576 cattle to Zambeef. “Based on 2019 supplied quantities, Wellspring is expected to supply approximately 1,343 cattle with an approximate value of K4,600,185 (c. US$260,000) and CRC is expected to supply 1,480 cattle with an approximate value of K7,830,617 (c. US$440,000)”. This translates to approximately 32% of the cattle the companies supply to the feedlot.
The food processing company makes an investment in the variety of cattle they buy from various farmers. “Zambeef buys weaners (heifer and steers) culled cows and these two suppliers and these are placed in the feedlot for about six months before being slaughtered”. Zambeef also buys cattle from other traditional and commercial farmers throughout the year. On average, the Company keeps about 8,000 cattle in the feedlot during the year.
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