Ag Growth International Inc.
TSX : AFN

Ag Growth International Inc.

December 20, 2010 20:06 ET

Ag Growth Announces Strategic Acquisition

WINNIPEG, MANITOBA--(Marketwire - Dec. 20, 2010) - Ag Growth International Inc. (TSX:AFN) ("Ag Growth" or the "Company") today announced the acquisition of 100% of the outstanding shares of Tramco Inc. ("Tramco")(www.tramcoinc.com), a manufacturer of heavy duty chain conveyors and related handling products that are sold primarily into the grain and oilseed processing sectors. The purchase price of USD $21.3 million plus closing costs and a working capital adjustment will be financed from Ag Growth's cash on hand and represents a valuation of approximately five times Tramco's normalized EBITDA over their last two fiscal years.

Tramco was established in 1967 and is located in Wichita, Kansas with an overseas manufacturing facility in Hull, England and a sales office in the Netherlands. Tramco is active in both the domestic and international grain processing sectors with average sales over the last two fiscal years of approximately USD $30 million. Tramco's international footprint is augmented with a strategic alliance in China and sales efforts in other major processing markets such as South America. To date, Tramco has sold conveyors into more than fifty foreign countries.

"We are very excited to join forces with this market leader in the grain processing segment", said Gary Anderson, Chief Executive Officer, "Tramco is an industry leader with a premier brand name and strong market share and as such provides an excellent entry point into the next important segment of the chain, the grain processing sector. The processing industry is an integral part of the food supply chain and is a compelling direction for Ag Growth to continue to build its leadership in grain handling equipment. The leverage of customer relationships to provide "one stop" shopping, the ability to participate in a market where international growth is strong, and the opportunity to raise our North American profile are all powerful, strategic reasons to make our entrance with a strong brand like Tramco. Tramco has established a globally recognized brand name under the leadership of founder Leon Trammell, who built his company based on product innovation and an extreme passion for customer satisfaction. Leon has positioned Tramco well to take advantage of increasing opportunities in an expanding grain processing industry."

Conference Call

Ag Growth will hold a conference call on Wednesday, December 22, 2010, at 4:30 P.M. EST to discuss the acquisition. To participate in the conference call, please dial 1-866-226-1792 or for local access dial 416-340-2216. An audio replay of the call will be available for seven days. To access the audio replay, please dial 1-800-408-3053 or for local access dial 905-694-9451. Please quote confirmation code 8110756.

Company Profile

Ag Growth is a leading manufacturer of portable and stationary grain handling, storage and conditioning equipment, including augers, belt conveyors, chain conveyors, grain storage bins, grain handling accessories, grain aeration equipment and grain drying systems. Ag Growth has ten manufacturing facilities in Canada, the U.S. and Finland and its sales, marketing, and distribution system distributes product in 48 states, nine provinces, and internationally.

Non-GAAP measures

References to "normalized EBITDA" are to earnings before interest, income taxes, depreciation and amortization as adjusted for items that in the opinion of management are non-operational or non-recurring in nature. Management believes that, in addition to net income or loss, normalized EBITDA is a useful supplemental measure in evaluating a company's performance. Normalized EBITDA is not a financial measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP. Management cautions investors that normalized EBITDA should not replace net income or loss as indicators of performance, or cash flows from operating, investing, and financing activities as a measure of the Company's liquidity and cash flows. Ag Growth's method of calculating normalized EBITDA may differ from the methods used by other issuers.

Forward-Looking Statements

This press release contains forward-looking statements that reflect our expectations regarding the future growth, results of operations, performance, business prospects, and opportunities of the Company. Forward-looking statements may contain such words as "anticipate", "believe", "continue", "could", "expects", "intend", "plans", "will" or similar expressions suggesting future conditions or events. In particular, the forward looking statements in this press release include statements relating to the benefits of the acquisition to our business and strategy, including growth in sales to developing markets, the impact of crop conditions in our market areas, the impact of current economic conditions on the demand for our products, our working capital and capital expenditure requirements, capital resources and the payment of dividends. Such forward-looking statements reflect our current beliefs and are based on information currently available to us, including certain key expectations and assumptions concerning anticipated financial performance, business prospects, strategies, product pricing, regulatory developments, tax laws, the sufficiency of budgeted capital expenditures in carrying out planned activities and the cost of labour and services. 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 international, national and local business conditions, crop yields, crop conditions, seasonality, industry cyclicality, volatility of production costs, commodity prices, foreign exchange rates, the cost and availability of capital and competition. These risks and uncertainties are described under "Risks and Uncertainties" in our MD&A for the year ended December 31, 2009 and in our most recently filed Annual Information Form. Although the forward-looking statements contained in this press release are based on what we believe to be reasonable assumptions, we cannot assure readers that actual results will be consistent with these forward-looking statements and we undertake no obligation to update such statements except as expressly required by law.

Contact Information

  • Ag Growth International Inc.
    Steve Sommerfeld
    Investor Relations
    204-489-1855
    steve@aggrowth.com