Pursuant to the agreement, AF Bran Holdings agreed to purchase membership units of Nutra SA directly from NutraCea for $4 million and to invest an additional $3.725 million in Nutra SA to fund expansion and provide working capital at Irgovel, which operates a Pelotas, Brazil-based rice bran oil production facility.
After the initial closing, NutraCea will own a 64.4% interest in Nutra SA and AF Bran Holdings will own the remaining 35.6% interest. In addition, AF Bran Holdings may be required to purchase from Nutra SA or NutraCea, upon the occurrence of certain events, or it may elect to purchase from NutraCea, up to a 49% ownership interest in Nutra SA by December 2012.
W. John Short, chairman and chief executive officer of NutraCea, said, "We are extremely pleased to have entered into this partnership with AF Bran Holdings. I want to personally thank all of those involved at both AF Bran Holdings and at NutraCea for working diligently through the holidays to finalize these agreements.
"The proceeds that NutraCea receives from this transaction will be used to make distributions to creditors for allowed claims in accordance with the terms of our amended plan of reorganization and to fund operating needs as we continue the restructuring of our global business interests. Funds directed to Irgovel will be used to expand raw rice bran processing capacity from 70,000 metric tons per year to in excess of 85,000 tonnes per year and to add new technologies to create value added derivative products from rice bran oil and defatted rice bran. We expect the expansion and new technology projects to take about 18 months to come fully on line and to produce an increase in Irgovel's EBITDA by more than 300% within 36 months.
"We enter the New Year with great enthusiasm. We are energized by the opportunity to work with the AF Bran Holdings team to turn Irgovel into a state-of-the-art rice bran oil bio-refinery. We continue to be gratified by the support that we have received from all our constituencies and look forward to reporting our progress to you in 2011 and beyond."
The transactions are subject to closing conditions which must be satisfied in order for the transaction to be consummated. NutraCea cannot guarantee that the closing conditions will be satisfied and the transactions described above will occur.