NutraCea to Purchase Largest Rice Bran Oil Processing Facility in South America
As part of this agreement, the Company has secured arrangements for the supply of raw rice bran with several local mills to initially provide 70,000 tons annually, which will be used for rice bran oil production.
05/02/08 NutraCea, a world leader in stabilized rice bran (SRB), nutrient research and technology, announced that it has executed a definitive agreement to purchase the largest rice bran oil processing facility in South America, located in Brazil. This transaction is expected to close prior to the end of February 2008, subject to the satisfaction of certain customary closing conditions. More details of this transaction will be announced at the closing.
As part of this agreement, the Company has secured arrangements for the supply of raw rice bran with several local mills to initially provide 70,000 tons annually, which will be used for rice bran oil production.
The purchase of this facility allows NutraCea to immediately enter the edible oils market and have a location for distribution of its proprietary products in South America. This acquisition also provides a platform for the introduction of new, value-added products that NutraCea has been internally preparing to roll out, pending the procurement of additional amounts of bran, which this project provides a significant step towards accomplishing.
Over the last two years, NutraCea has been working toward and has now obtained all the necessary regulatory and government permits, including Anvisa registration, to be able to sell its entire portfolio of patented and proprietary stabilized rice bran and stage two derivative products into the Brazilian and South American markets. Products from the Brazilian plant will be sold in Brazil, neighboring South American countries and exported throughout the world. NutraCea has been devoting research and development resources internally in preparation for incorporating its proprietary stabilization technology into the rice bran oil extraction business.
"We believe our new technology will improve the dynamics of the process, allowing NutraCea to achieve significantly higher value end-products. NutraCea will incorporate its new technology into these facilities during the first year of operation and should realize the benefits of the incremental profits in the year 2009. We look to capitalize on this proprietary technology in future opportunities that might become available to us," said Brad Edson, President and Chief Executive Officer of NutraCea.
"The consumer trend away from trans fatty acids and the global demand for more healthful choices in edible oils has helped to drive rice bran oil prices higher. With the purchase of this new facility, we are poised to take advantage of the growing worldwide demand for healthy, edible oil and create new, patented and proprietary value-added derivatives from rice bran, utilizing technologies developed at NutraCea," said Leo Gingras, Chief Operating Officer of NutraCea.
Edson, continued, "As we have stated in the past, the establishment of our facilities in the major, rice-growing regions around the world is essential to our long-term, strategic growth plan. We believe our Brazilian facility will provide NutraCea with the opportunity for increasing revenues going forward, not just for stabilized rice bran, but also for healthful edible oils and value-added products derived from the rice bran and oil."
The Company will continue to negotiate other supply agreements for rice bran, which will provide the raw material necessary to produce NutraCea's proprietary stabilized rice bran and value-added derivative products.
