Obtala Ltd (LON:OBT) is looking at two options for its agriculture business - either seeking a strategic partner or spinning it out - in order to focus on its growing forestry and timber trading divisions.
The AIM-quoted company grows crops such as butternut squash and melons at its farms in Tanzania, while it also sells a range of tinned foods and sauces under its Mama Jo’s brand.
WATCH: Obtala chairman discusses name change and forestry focus
But Obtala said the agriculture side of its operations “simply cannot match the rapid growth potential” of its forestry and timber business, which has accounted for more than 98% of turnover so far this year.
“The board has therefore taken the decision to seek a strategic partner or to fully spin out the agriculture business,” read a statement on Tuesday.
Change of name to WoodBois
To reflect the focus on the forestry division, which supplies forestry products to customers around the world, Obtala is planning to change its name to WoodBois, the company it bought last summer.
“The strength of the WoodBois brand has become increasingly apparent to the board since making the acquisition fifteen months ago,” said Obtala.
“With our strategy now specifically focused on building a best in class forestry and timber trading platform, the decision to rename the group under the banner of the stronger and more recognised of our two brands is obvious.”
WoodBois’ principals Hadi Ghossein, Zahid Abbas and Jacob Hansen will join the main Obtala board, while Martin Collins will step down, having fulfilled his job of overseeing the firm’s transition from legacy activities to the now streamlined forestry and timber trading operations.
£2.7mln placing
To help grow the business further, Obtala is raising £2.7mln by selling new shares at 5.5p apiece – slightly below Monday’s closing price of 5.9p.
Chairman Miles Pelham and chief executive Paul Dolan are putting a combined £180,000 of their own money into the placing.
“It is clear from all the negotiations we have had to date, that the preference for trade finance providers is to provide a factoring service against receivables,” said CEO Dolan.
After being down early on, Obtala shares jumped 8.5% on Tuesday afternoon to 6.4p.
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