MGP Ingredients, Inc. (Nasdaq:MGPI) announced
today that it has entered into a merger agreement with an affiliate
of SEACOR Holdings, Inc. and Pacific Ethanol Central, LLC that
would result in a sale of its thirty percent equity ownership
interest in Illinois Corn Processing, LLC ("ICP") to Pacific
Ethanol.
“The sale of ICP will enable MGP to fully focus on growing our
core businesses of premium beverage alcohol and specialty
ingredients products,” said Gus Griffin, president and CEO of
MGP. “This transaction is another step in our strategic plan
to realize the full potential of MGP for our shareholders.”
Total proceeds of $76 million will be paid in a combination of
$30 million in cash and through the issuance of secured promissory
notes with an aggregate principal amount of $46 million to both of
the ICP members in proportion to their ownership. The
purchase price is subject to customary pre- and post-closing
adjustments.
The transaction is subject to customary representations,
warranties and covenants, including covenants with respect to the
operation of ICP prior to the closing of the merger transaction.
The transaction is also subject to customary closing
conditions. Guggenheim Securities LLC acted as exclusive
financial advisor to Illinois Corn Processing, LLC.
MGP expects that its Board of Directors will declare a special
dividend of approximately $0.85 per share of common stock
outstanding, or $14.5 million in the aggregate, to occur within 30
days of closing the merger transaction. This dividend will
primarily be funded from the initial cash proceeds from the sale
and cash received from a dividend distribution from ICP of $6.6
million approved on June 26, 2017.
Effects of Transaction and Long Term
Guidance
Income from MGP's ownership of ICP is reported as equity method
investment earnings. The transaction will not affect MGP's
sales or operating income, but will reduce MGP's net income by
eliminating equity method investment earnings after the date of
closing. For the period ending March 31, 2017, MGP reported
equity method investment earnings of $471,000, or $0.02 per
share. For the year ended December 31, 2016, MGP had equity
method investment earnings of $4.0 million from its ownership of
ICP, or $0.17 per share.
The transactions contemplated by the Merger Agreement would
result in a gain on sale of equity method investment, net of tax,
of approximately $8.0 million. This pro forma financial
information is presented for illustrative purposes only, is based
on certain assumptions that we believe are reasonable, and is not
necessarily indicative of the results of the contemplated
transaction.
There is no change at this time to the Company’s
previously-issued guidance regarding revenue or operating income
expectations. Additional details of the merger transaction can be
found in the Company's Form 8-K filed with the Securities and
Exchange Commission on June 27, 2017.
About Illinois Corn Processing (ICP)
ICP produces high quality food grade alcohol, chemical
intermediates, and fuel at its Pekin, Illinois facility.
Illinois Corn Processing Holdings Inc., an affiliate of SEACOR
Holdings, Inc., holds the remaining equity in ICP. MGP's
share of the merger consideration will equal its proportionate
ownership percentage.
About MGP Ingredients, Inc.
MGP is a leading producer and supplier of premium distilled
spirits and specialty wheat proteins and starches. Distilled
spirits include premium bourbon and rye whiskeys, gins and vodkas,
which are carefully crafted through a combination of art and
science and backed by over 150 years of experience. The
Company’s proteins and starches are created in the same manner and
provide a host of functional, nutritional and sensory benefits for
a wide range of food products. MGP additionally is a producer
of high quality industrial alcohol for use in both food and
non-food applications. The Company is headquartered in
Atchison, Kansas, where distilled alcohol products and food
ingredients are produced. Premium spirits are also distilled
and matured at the Company facility in Lawrenceburg, Indiana. For
more information, visit mgpingredients.com.
Cautionary Note Regarding Forward-Looking
Statements
This news release contains forward-looking statements as well as
historical information. All statements, other than statements of
historical facts, included in this filing regarding the closing of
the transactions contemplated by the Merger Agreement, and our
prospects, plans (including special dividend plans), financial
position, business strategy, guidance on growth in operating
income, revenue, gross margin, and future effective tax rate may
constitute forward-looking statements. Forward-looking statements
are usually identified by or are associated with such words as
"intend," "plan," "believe," "estimate," "expect," "anticipate,"
"hopeful," "should," "may," "will," "could," "encouraged,"
"opportunities," "potential" and/or the negatives or variations of
these terms or similar terminology. They reflect management's
current beliefs and estimates and are not guarantees of future
performance. All such forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those contemplated by the relevant
forward-looking statement. The risks and uncertainties in
connection with such forward-looking statements related to the
proposed transactions include, but are not limited to, the
occurrence of any event, change or other circumstances that could
delay the closing of the proposed transactions; the possibility of
non-consummation of the proposed transactions and the termination
of the Merger Agreement; the failure to satisfy any of the
conditions to the closing of the merger in the Merger
Agreement; adverse effects on the Company’s common stock because of
the failure to complete the proposed merger transaction; and the
dependence of the proposed special dividend of the consummation of
the merger transaction. For further information on other risks and
uncertainties that may affect our business see Item 1A. Risk
Factors of our Annual Report on Form 10-K for the year ended
December 31, 2016.
For More Information
Investors & Analysts:
Bob Burton
616-233-0500 or Investor.Relations@mgpingredients.com
Media:
Greg Manis
913-360-5440 or greg.manis@mgpingredients.com
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