ASX-listed juice maker Food Revolution Group has sold its New Zealand operations and is leasing its LangTech citrus assets to Singapore-based Gravity Solutions Global in a deal it values at more than $A17 million.
Food Revolution's New Zealand business, Roxdale Foods, is based near Alexandra and processes fruit and vegetables for juice, fibre, puree and pastes, according to its website. In the 15 months to June 30, 2013, Roxdale Foods reported a $1.3 million profit on revenue of $1.6 million, with about $600,000 of its sales from LangTech, its immediate parent. At that time, Roxdale Foods had a $506,053 loan from LangTech, and net debt of $133,076.
Gravity Solutions Global, which says on its website that it develops healthy ingredients from food waste, has bought 100% of the shares in Roxdale Foods for A$1.2 million, and Food Revolution's "bioactive intellectual property" for $A1.7 million, the ASX-listed company said in a statement.
Gravity Solutions will also lease the LangTech Citrus plant for $A1 million per year for 10 years, and part of Food Revolution's plant in Victoria for $A200,000 per year for 10 years. Food Revolution will have access to the ingredients which Gravity Solutions manages, and will get 20% of the profits made by Gravity Solutions on new product sales which increase production above current levels.
The deal, which earns Food Revolution $A14.9 million without the profit share arrangement, will be worth more than $A17 million over 10 years, the manufacturer said. Last week, Food Revolution said its recent product launches had generated revenue of $A1 million per month for three months in a row with an average gross margin of more than 35%.
"This will significantly reduce our expenditure on further research and development of ingredients and technologies," chief executive Bill Nikolovski said. "The sale of the bioactives and ingredient intellectual property will give us value for the assets."
Nikolovski said Gravity Solutions had strong sales and R&D team, international distribution capabilities and enough capital to commercialise its technology and ingredients.
The ASX-listed shares were unchanged at 16AC and have declined 5.9% so far this year.
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