SCOTTSDALE, ARIZONA, U.S. — RiceBran Technologies has entered into an exclusive strategic supply agreement for organic rice bran with Bangkok, Thailand-based Narula Group of Companies. Narula is one of the world’s largest growers of organic rice.
Under terms of the supply agreement, RiceBran Technologies will gain exclusive worldwide supply and distribution rights for organic jasmine rice bran and organic rice bran from other rice varieties produced by the Narula Group. The exclusive territory excludes certain South East Asian markets, Germany and the United Kingdom, which will continue to be serviced by the Narula Group.
Additionally, RiceBran Technologies said it will purchase organic rice bran from the Narula Group at an agreed price, and the Narula Group will receive an additional amount based on a portion of the achieved margin earned by RiceBran Technologies on the sale of products derived from that organic rice bran.
The Narula Group said it has agreed to accept the first $2,660,000 of its achieved margin share through the issuance of 950,000 shares of RiceBran Technologies’ common stock at a fixed purchase price of $2.80 per share, representing a premium of 52% to the closing price on the date immediately prior to signing.
In addition to the strategic supply agreement, RiceBran Technologies and the Narula Group have established a joint venture company. The company, RBT - Youji, LLC, will be 55% owned by RiceBran Technologies and 45% owned by the Narula Group. The company will be responsible for marketing the Narula Group’s non-rice bran products in North America, including organic chia, kale, coconut water and coconut products. Results for the newly established joint venture will be consolidated into RiceBran Technologies’ financial statements, and the partners will share the profits on a proportional ownership basis. Both companies expect to bring additional organic products to market in North America in the near future.
“The agreements reached with the Narula Group add organic rice bran and other healthy, natural and organic products to our existing offerings of non-GMO, healthy and natural functional food products and significantly broaden our product range, putting (RiceBran Technologies) in an even better position to take advantage of rapidly developing consumer trends away from dietary supplements and toward healthy whole food nutrition through functional foods and ingredients,” said W. John Short, president and chief executive officer of RiceBran Technologies.
Arvind Narula, president of the Narula Group, said, “I have spent the last 30 years developing a for-profit business model based on organic products that gives back to the economically disadvantaged and culturally indigenous groups who work with us to grow our crops. I am excited to enter into this strategic relationship with RiceBran Technologies, a company that shares our deeply held philosophy that businesses need to be socially and environmentally responsible and give back to the communities where they do business.”
RiceBran Technologies said it expects sales of high value, high margin organic rice bran and organic non-rice bran products to launch in North America in the second quarter of 2016 and become a significant driver of sales growth in its USA Segment in the coming years.