NutraCea Completes Purchase of Largest Rice Bran Oil Processing Facility in South America
NutraCea anticipates investing approximately $4 to $6 million to refurbish, upgrade and install their proprietary equipment into the facility and expects to complete this project by the end of this year.
25/02/08 NutraCea, a world leader in stabilized rice bran (SRB), nutrient research and technology, announced that it is has completed the purchase of Irgovel, the largest rice bran oil processing facility in South America, for a purchase price of approximately $14 million. The 70,000 ton annual capacity facility located in Pelotas, Brazil provides NutraCea with the opportunity to sell rice bran oil in addition to its entire portfolio of patented and proprietary stabilized rice bran and stage two derivative products into the Brazilian and global marketplace.
NutraCea announced its intent to purchase the facility on February 4th subject to certain closing conditions, which have now been satisfied. The Company paid $14,080,000 for all of the outstanding equity interests in Irgovel. In addition, the Company may provide capital to Irgovel as necessary to fund approximately $5.3 million in installment payments owed by Irgovel to the Brazilian government for deferred tax obligations. These deferred tax amounts are payable over a period of 10 years.
The 40 year old rice bran oil facility is the largest in South America. Currently, the plant is operating at about one-third of its capacity. NutraCea anticipates investing approximately $4 to $6 million to refurbish, upgrade and install their proprietary equipment into the facility and expects to complete this project by the end of this year.
"When running at full capacity, we believe that the plant can generate approximately $30 million in annual sales from the rice bran oil. As previously announced, NutraCea will install its proprietary technology during 2008 to improve the dynamics of the traditional rice bran oil extraction business for the production of higher value-added derivative products. We anticipate these new derivative products could result in meaningful additional revenue, beyond what is stated above, beginning in 2009," said Leo Gingras, Chief Operating Officer of NutraCea.
NutraCea has entered into marketing arrangements, which it believes will allow the Company to sell the plant's current production capacity as well as all future expanded production.
Brad Edson, President and Chief Executive Officer of NutraCea said, "We are extremely pleased to have completed this transaction, which is a significant next step in our strategic growth plan to establish facilities in leading rice bran producing regions of the world in order to further grow our market presence and increase shareholder value."
"We have spent a great deal of time in discussions with members of the Brazilian government on many levels over the past two years and are most appreciative of the positive reception that we have received and the co- operation we have obtained," added Edson.
"Pelotas is a recognized agro-industrial city in our country. I'm confident NutraCea will help us increase this sector. Therefore, we are very pleased that NutraCea has found us and come to be a part of our economy," stated Dr. Adolfo Fetter Junior, Mayor of Pelotas, Brazil.
Irgovel is located in the third largest city in the southern state of Rio Grande do Sul with a population of approximately 350,000. NutraCea will be one of the largest employers in the area and, as a major potential contributor to the local economy, has been enthusiastically welcomed by local, state and federal governments.
