Earlier this month NutraCea, a leader in the stabilized rice industry, announced its intent to purchase the Irgovel faculty in Pelotas, Brazil. As of today, NutraCea has completed the purchase for approximately $14 million.
The Irgovel facility has been around for 40 years and is the largest rice bran oil processing facility in South America. Irgovel is operating at about one-third of its capacity and produces approximately 70,000 ton of rice bran oil annually. NutraCea anticipates investing approximately $4 to $6 million to refurbish, upgrade and install their proprietary equipment into the facility.
Once the renovation project is completed, NutraCea will have the opportunity to sell rice bran oil in addition to its entire portfolio of patented and proprietary stabilized rice bran and stage two derivative products into the Brazilian and global marketplace.
In regards to its anticipated revenues, Chief Operating Officer, Leo Gingras stated, “When running at full capacity, we believe that the plant can generate approximately $30 million in annual sales from the rice bran oil.”
As per the details of the sale, NutraCea paid $14,080,000 for all of the outstanding equity interests in Irgovel. In addition, the Company may provide capital to Irgovel as necessary to fund approximately $5.3 million in installment payments owed by Irgovel to the Brazilian government for deferred tax obligations. These deferred tax amounts are payable over a period of 10 years.
Another benefit of this purchase is NutraCea will be one of the largest employers in the area and, as a major potential contributor to the local economy, has been enthusiastically welcomed by local, state and federal governments.
Brad Edson, President and Chief Executive Officer of NutraCea said, “We are extremely pleased to have completed this transaction, which is a significant next step in our strategic growth plan to establish facilities in leading rice bran producing regions of the world in order to further grow our market presence and increase shareholder value.”
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