NutraCea Completes Purchase of Irgovel, Largest Rice Bran Oil Processing Facility in South America
NutraCea announced its intent to purchase the facility on February 4thsubject to certain closing conditions, which have now been satisfied. TheCompany paid $14,080,000 for all of the outstanding equity interests inIrgovel. In addition, the Company may provide capital to Irgovel as necessaryto fund approximately $5.3 million in installment payments owed by Irgovel tothe Brazilian government for deferred tax obligations. These deferred taxamounts 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 expectsto complete this project by the end of this year.
"When running at full capacity, we believe that the plant can generateapproximately $30 million in annual sales from the rice bran oil. Aspreviously announced, NutraCea will install its proprietary technology during2008 to improve the dynamics of the traditional rice bran oil extractionbusiness for the production of higher value-added derivative products. Weanticipate these new derivative products could result in meaningful additionalrevenue, 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 willallow the Company to sell the plant's current production capacity as well asall future expanded production.
Brad Edson, President and Chief Executive Officer of NutraCea said, "Weare extremely pleased to have completed this transaction, which is asignificant next step in our strategic growth plan to establish facilities inleading rice bran producing regions of the world in order to further grow ourmarket presence and increase shareholder value."
"We have spent a great deal of time in discussions with members of theBrazilian government on many levels over the past two years and are mostappreciative 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'mconfident NutraCea will help us increase this sector. Therefore, we are verypleased 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 RioGrande do Sul with a population of approximately 350,000. NutraCea will be oneof the largest employers in the area and, as a major potential contributor tothe local economy, has been enthusiastically welcomed by local, state andfederal governments.
NutraCea is a leader in stabilized rice bran nutrient research and dietarysupplement development. Through its wholly owned subsidiary RiceX, the companymanufactures as well as distributes products and food ingredients made fromRice Bran through its proprietary technology and processes. The Company hasdeveloped intellectual properties and created a range of proprietary productformulations, delivery systems and whole-food nutrition products. NutraCea'sproprietary technology en
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