A Regina-based pulse crop processor plans to convert from an income trust to a publicly-traded corporation, while also working on a cash-and-stock play into Turkish pulse and durum processing.
Alliance Grain Traders Income Fund, which owns SaskCan Pulse Trading at Regina, SaskCan Horizon Trading at Aberdeen, Sask., United Pulse Trading in North Dakota, and a milling firm in South Australia, said Thursday it has signed a deal to buy the Arbel Group Companies in Turkey.
Shareholders in the group — companies of which include Arbel Bakliyat Hububat Sanayi ve Ticaret (“Arbel”), Durum Gida Sanayi ve Ticaret (“Durum”), and Turkpulse Dis Ticaret (“Turkpulse”) — have already committed to the deal, Alliance Grain Traders said Thursday.
The Arbel Group, a major processor of pulses and grains and exporter of pulses and pasta, operates out of the southern port city of Mersin and is no stranger to its buyer.
Arbel is already a substantial investor in Alliance Grain’s pulse business, working with Alliance’s CEO Murad Al-Katib. Born in Davidson, Sask. to Turkish immigrants, he was credited in a Country Guide cover feature (March 2009) with connecting Arbel to the pulse industry in his home province.
Shareholders in the Arbel Group will get $60.1 million in cash and $44 million in Alliance common shares at $15.45 a share, the Regina firm said. Pending the necessary approvals, the deal is expected to close by Aug. 27.
Alliance Grain Traders Inc. (AGTI), a subsidiary of the income fund, would become owner of the Turkish firms’ assets, and is also expected to be the “successor entity” to the income trust as it makes the conversion to a corporate structure.
Alliance Grain’s move follows the federal government’s decision to tax income trusts starting in June 2007. Other Canadian ag and food-related income funds such as Village Farms, Ag Growth Industries and Premium Brands have announced such conversions in recent months.
Alliance Grain, which now trades on the TSX Venture Exchange, has already applied to “graduate” to the TSX, a move meant to improve Alliance Grain’s liquidity as well as its “profile.”
Under the deal with AGTI, Arbel Group shareholders would place all the common shares they receive from this deal into escrow for two years, but would have the right to have the shares released and sell up to 25 per cent of these shares at the end of each six-month period, starting six months after the Arbel deal is sealed.
Alliance Grain said 10 per cent of the purchase price for the Arbel Group will also be put in escrow to be “available to indemnify AGTI for any breaches of the representations and warranties made by the Arbel Group shareholders in the acquisition agreements.”
Alliance’s businesses involve sourcing, cleaning, splitting, sorting and bagging specialty crops, mainly for export, including lentils, peas, chickpeas, beans and canary seed.