AG Growth Income Fund
TSX : AFN.UN

AG Growth Income Fund

December 22, 2006 12:41 ET

Ag Growth Income Fund Announces Strategic Acquisition

WINNIPEG, MANITOBA--(CCNMatthews - Dec. 22, 2006) - 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 assets of Hansen Manufacturing Corp. ("Hansen") of Sioux Falls, South Dakota, for USD $18.5 million.

Hansen's primary products, the Hi Roller brand of conveyors, are enclosed, dust tight, self-cleaning belt conveyors designed for installation in grain handling facilities, soy and corn processing operations, and industrial operations. Hansen products are ideally suited for new construction and facility upgrades in the value-added food processing and bio-energy space. Hansen is the market leader in the product line originally conceived by its founder, and has a highly recognized and respected brand name in Hi Roller.

Revenues from Hansen's business have increased from USD $9.4 million in 2002 to USD $13.3 million in 2005, when they recorded normalized EBITDA of USD $3.6 million. These strong operating results, combined with low historical CAPEX requirements, results in an acquisition that management believes will be immediately accretive to the Fund.

Gary Anderson, President and Chief Operating Officer of the Fund, stated, "The Hansen acquisition provides Ag Growth with an excellent point of entry into the commercial side of the grain handling equipment spectrum, creating a well defined continuum for future strategic development. We are attracted to the macroeconomics of the commercial grain handling equipment sector, driven by growing global demand for food products, growth in value-added food processing, and increased demand for bio-energy products including ethanol and bio-diesel. Hansen has earned an admirable reputation in the marketplace for high quality products and superior customer service."

Mr. Anderson continued, "The Hi Roller brand of conveyors represent the standard in stationary conveying systems for large grain storage and processing facilities. With the trend in on-farm grain storage pointing to larger systems requiring additional stationary conveying equipment, Hi Roller positions Ag Growth to be able to meet the needs of its customer of the future. Hansen is experiencing significant growth and we are excited about the opportunity to work with such a skilled and energetic management team."

FINANCING

The Fund has reached an agreement with TD Commercial Banking to provide debt financing of up to USD $18.5 million to fund the acquisition and related closing costs. Terms and conditions of the financing are consistent with the Fund's existing credit agreement. The financing is subject to customary closing conditions and funding is scheduled for December 29, 2006.

Company Profile

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

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. Specifically, management believes that EBITDA is the appropriate measure from which to make adjustments to determine the Fund's distributable cash. 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.

Distributable cash is a non-GAAP measure generally used by Canadian income funds as an indicator of financial performance. The Fund defines distributable cash as EBITDA less interest expense, maintenance capital expenditures, and current taxes. Distributable cash is not a financial measure recognized by Canadian generally accepted accounting principles ("GAAP") and does not have a standardized meaning prescribed by GAAP. The method of calculating the Fund's distributable cash may differ from similar computations as reported by similar entities and, accordingly, may not be comparable to distributable cash as reported by such entities.

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 2005 Annual Report and our Annual Information Form dated March 16, 2006. 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
    Steve Sommerfeld
    Investor Relations
    (204) 489-1855
    Email: steve@aggrowth.com