Rubicon has taken full ownership of forestry biotech firm ArborGen, buying out its partners for US$29 million, having raised money from US investors to help fund the deal.
The NZX-listed forestry firm will pay International Paper and WestRock a total of US$14 million today in the first tranche of the deal, followed by a US$5 million payment on Dec. 31 and US$10 million on June 30 next year, it said in a statement. Those second and third tranches are secured against all of Rubicon's ArborGen shares.
Rubicon will partially fund the transaction through a US$12.5 million share placement to US hedge fund Libra Fund and the New Zealand company's biggest shareholder, Knott Partners. The issue will be a small premium to the 21.5 cents the shares last traded at before the announcement, equating to 21.8 cents based on an exchange rate of 72.78 US cents, and will settle at the end of the week. The shares rose 2.3 percent to 22 cents today.
Libra will buy 56.8 million shares, lifting its stake to 18 percent from 7.7 percent, while Knott will maintain its stake at 28 percent. The new shares issued equate to about 19 percent of the company.
"The structure of the deferred purchase price payment schedule, together with the Rubicon US$12.5 million share placement announced today ensures that there will be no demands on the remaining shareholders for equity capital in order to complete this transaction," chairman Steve Kasnet said. "ArborGen has always been core for us - we are a founding partner of the business, and we have for some time been keen to extend our involvement to help the company realise its full potential."
The deal follows Rubicon's scaled back exposure to the Taupo-based wood processor Tenon, where the local business was bought by a consortium including Rubicon, albeit with a smaller stake.
In its first-half earnings review, Rubicon said one of its immediate priorities was to agree with its fellow ArborGen shareholders "the appropriate funding and value extraction plan forward", with the unit seen generating more than US$40 million of annual revenue in the current financial year as rapid growth in Brazil offset a largely flat US market, and broke even on a earnings before interest, tax, depreciation and amortisation basis.
Rubicon and its partners had planned to float ArborGen, raising between US$82 million and US$92 million, but that shelved in 2011, with the owners saying market conditions on Wall Street at the time were too weak.
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