African-focused agricultural and forestry company, Obtala Limited (LON:OBT), has announced two separate agreements that will increase its profit share in the Magole Farms and Wami Farms operations in Tanzania.
The company’s 75%-owned subsidiary, Montara Continental Limited, has purchased 195 hectares (ha) of agricultural land at Magole Farms for a total cash consideration of TZS1.1bn (£380,000).
WATCH: Obtala's Miles Pelham on 'very welcome surprises' to come from Woodbois acquisition
The newly acquired land will be subject to a new lease to a firm 90% owned by Montara, with the remaining 10% owned by Magole Land. This gives Montara an effective 94.9% profit share in the operation, located near Morogoro.
Under the deal, Montara’s ownership in the processing assets will increase from 80% to 100%.
Separately, Obtala has renegotiated a deal to raise Montara's equity and profit share in the joint venture that operates the 1,200ha Wami Farms in Tanzania from 70% to 90% for a nominal cash consideration.
"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,” said Obtala chairman Miles Pelham.
“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."