AG Growth Income Fund
TSX : AFN.UN

AG Growth Income Fund

January 15, 2008 16:59 ET

Ag Growth Acquires Applegate Steel

WINNIPEG, MANITOBA--(Marketwire - Jan. 15, 2008) - Ag Growth Income Fund (TSX:AFN.UN) ("Ag Growth" or the "Fund") announced today it has entered into an agreement to acquire substantially all of the operating assets of Applegate Steel Inc. ("Applegate") of Saratoga, Indiana, for USD $3.0 million.

Applegate manufactures livestock gates, panels, feeders and stock tanks at locations in Indiana and Iowa. Revenues from Applegate's business over the last number of years have ranged from USD $9 million to over USD $12 million.

Ag Growth did not purchase Applegate's manufacturing facility in Saratoga, Indiana, but instead will move manufacturing operations to Union City, Indiana. The Fund acquired a 160,000 square foot facility in Union City in November 2007 to provide manufacturing capabilities in its core U.S. market, in a region with ready access to labour, and to help alleviate labour constraints in western Canada. Increasing production in the U.S. will also assist the Fund in reducing its foreign currency exposure.

Rob Stenson, Chief Executive Officer of the Fund, stated, "We are very pleased to announce the acquisition of Applegate. The Applegate product line, which has been in existence for almost 50 years, complements certain products manufactured by the Fund's Wheatheart and Edwards divisions and provides the Fund with a more substantial footing in the livestock end of the agricultural market. It is also very significant to the Fund that Applegate's management and in place workforce will allow us to service our expanding market by more quickly transferring certain manufacturing from our labour constrained western Canadian operations to the facility in Union City."

FINANCING

The acquisition of Applegate Steel will initially be funded by drawing on the Ag Growth cash balance. Subsequent to closing the Fund will consider drawing on its available credit facilities with TD Commercial Banking and CIBC Commercial Banking.

Company Profile

Ag Growth is a leading manufacturer of portable and stationary grain handling, storage and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories and grain aeration equipment. Ag Growth's sales, marketing, and distribution system is comprised of approximately 1,400 dealers and distributors that distribute product in 48 states, nine provinces, and overseas.

Non-GAAP measures

References to "EBITDA" are to earnings before interest, income taxes, depreciation, and amortization. Management believes that, in addition to net income or loss, EBITDA is a useful supplemental measure in evaluating its performance. EBITDA is not a financial measure recognized by Canadian generally accepted accounting principles ("GAAP") and does not have a standardized meaning prescribed by GAAP. Management cautions investors that EBITDA should not replace net income or loss as an indicator of performance, or cash flows from operating, investing, and financing activities as a measure of the Fund's liquidity and cash flows. The Fund's method of calculating EBITDA may differ from the methods used by other issuers.

Forward-Looking Statements

The statements contained in this news release may contain forward-looking statements that reflect our expectations regarding the future growth, results of operations, performance and business prospects, and opportunities of the Fund. Forward-looking statements contain such words as "anticipate", "believe", "continue", "could", "expects", "intend", "plans" or similar expressions suggesting future conditions or events. Such forward-looking statements reflect our current beliefs and are based on information currently available to us. Forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from results discussed in the forward-looking statements, including changes in national and local business conditions, decreased crop yields, industry cyclicality, and competition. These risks and uncertainties are fully described in our 2007 Annual Report and our Annual Information Form. Further information about these and other risks and uncertainties can be found in the disclosure documents filed by Ag Growth Income Fund with the securities regulatory authorities, available at www.sedar.com.

Contact Information

  • Ag Growth Income Fund
    Investor Relations
    Steve Sommerfeld
    (204) 489-1855
    Email: steve@aggrowth.com