Proposed Acquisition of Palm Oil Company
August 18 2009 - 2:00AM
UK Regulatory
TIDMAGTA
RNS Number : 5780X
Agriterra Ltd
18 August 2009
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector: Agriculture
18 August 2009
Agriterra Ltd ('Agriterra' or 'the Company')
Proposed Acquisition of West African Palm Oil Company
Agriterra Ltd, the AIM listed company focussed on the agricultural sector in
central and southern Africa, announces that it has signed a Memorandum of
Understanding to acquire, in principle, Equatorial Biofuels (Guernsey) Limited
('EBF'), the palm oil developer, from Equatorial Palm Oil Plc ('EPO'). The
consideration for the acquisition, which is subject to due diligence and certain
conditions, is expected to be approximately US$12 million, to be satisfied by a
cash payment of US$2.5 million and the allotment of 110,000,000 Ordinary Shares
in the Company. The potential acquisition of EBF is in line with Agriterra's
strategy to acquire or invest in businesses operating in the agricultural sector
in Africa, and will complement its existing activities of grain processing and
cattle ranching in Mozambique.
EBF, which is wholly owned by EPO, is focussed on becoming a sustainable,
low-cost producer of crude palm oil in Africa through the reactivation and
development of its existing plantations and agricultural land bank, which total
more than 169,000 hectares in Liberia, West Africa. Through its Liberian
subsidiary companies, EBF has large areas of land suitable for brownfield
redevelopment, in addition to cleared or secondary growth land available for
expansion, all of which has limited impact on virgin forests. The Company sees
that there is potential for early cash flow from EBF from the reactivation of up
to 10,000 hectares of existing plantations. Importantly, EBF has established
strong relationships with local and regional government, with a 50 year
investment agreement signed and ratified by the Liberian Government.
In addition to EBF's large agricultural land bank, it also plans to establish an
out-grower scheme in Liberia, which will work to train members of the local
community and create long term employment and livelihoods. This is similar to
the models being utilised at the Company's grain buying and processing operation
in Mozambique, which provide a market for circa 500,000 small holder farmers.
EBF has committed to a target of employing over 5,000 local workers by 2017 and
has already embarked on evaluating community and infrastructural projects to
improve the regional infrastructure including the local ports. This is in line
with EBF's stated objective of becoming a leading producer of crude palm oil,
primarily for human consumption, in western Africa and open up export markets
for crude palm oil to other areas of Africa.
Agriterra CEO Andrew Groves said, "This proposed acquisition will advance our
objective of building Agriterra into a pan-African agricultural business with a
portfolio of activities which already includes substantial grain buying and
processing operations and cattle ranching in Mozambique. EBF meets our criteria
of investing in agriculture and food producers as over 75% of palm oil is
consumed in food preparation, and there is strong regional and international
demand for the product as one the world's major vegetable oils. The acquisition
of EBF will provide Agriterra with an all-important operational and logistic hub
in western Africa and access to the rapidly growing crude palm oil market within
an established development area. Liberia is currently a net importer of crude
palm oil, and West African nations as a whole import more than 400,000 tonnes
per annum, so there is already a vast untapped demand for domestically produced
palm oil. With increasing investment directed towards improving infrastructure
in Liberia, we will also have the ability to export our produce via the local
Atlantic coast ports utilising the Company's expertise in transport and
logistics.
"By diversifying our product range to include food stuffs such as crude palm
oil, which is used in a plethora of products such as margarine, chocolate and
zero-trans fat cooking oil, we enable year round processing of a variety of
products. By expanding our geographic reach to other countries and regions
within Africa, we ultimately mitigate potential risks associated with individual
commodity production and localised weather anomalies, creating an evermore
attractive investment opportunity to existing and potential shareholders."
Further announcements regarding the acquisition of EBF will be made to
shareholders in due course.
** ENDS **
For further information please visit www.agriterra-ltd.com or contact:
+--------------------+------------------------------+-------------------------+
| Andrew Groves | Agriterra Ltd | Tel: +44 (0) 845 108 |
| | | 6060 |
+--------------------+------------------------------+-------------------------+
| Jeremy Gray | Agriterra Ltd | Tel: +44 (0) 203 205 |
| | | 1469 |
+--------------------+------------------------------+-------------------------+
| Jonathan Wright | Seymour Pierce Ltd | Tel: +44 (0) 20 7107 |
| | | 8000 |
+--------------------+------------------------------+-------------------------+
| Hugo de Salis | St Brides Media & Finance | Tel: +44 (0) 20 7236 |
| | Ltd | 1177 |
+--------------------+------------------------------+-------------------------+
| Susie Callear | St Brides Media & Finance | Tel: +44 (0) 20 7236 |
| | Ltd | 1177 |
+--------------------+------------------------------+-------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
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