A/S Trigon Agri: Acquisition of new 36,000 hectare Stavropol cluster

Copenhagen, July13, 2009

A/S Trigon Agri today announces that it has signed an agreement for the acquisition of a new operational cluster in Stavropol region, Russia. The agreement provides for the acquisition of all existing cereal farming operations of the current Sovetskoye Runo operating company, comprising 36,408ha of continuously farmed land in a top-level Black Earth region of which 32,740ha is in fully registered freehold and 3,668ha is undergoing the process of ownership registration.

The total transaction value is USD 21 million on a debt-free basis, equating to a cost per hectare of USD 367 with the remaining purchase price of USD 9 million for cereals production equipment, intermediary field storage, other operational buildings and inventory. Under the terms of the acquisition Trigon Agri will pay USD 9 million during 2009, while the remaining USD 12 million will be paid in equal instalments over a four-year period up until 2013, allowing the majority of further consideration to be met from future retained earnings. The transaction will be completed during second half of 2009.

Kaupo Ojavee, CEO of Trigon Agri said:

“This acquisition is an excellent fit with our expansion strategy as it brings another contiguous land package, which has been continuously farmed and is well located for infrastructure into our portfolio. These are quality assets in a well populated area which will allow us to retain high quality employees and it adds an important new cluster to our production map. Following this acquisition we will have control of over 180,000 hectares of high quality land. This positions us well to continue to deliver value through our strategy of consolidation, productivity improvement and infrastructure investment.”

The cluster is located approximately 170km east from Stavropol and is made up of one large square contiguous area with a width of approximately 20km. The extremely compact layout provides for a high degree of logistical efficiency, and in 2006 the Guinness World Record for speed-seeding was set on the cluster, having seeded 620ha within a 24-hour shift using no-till technology. Out of the total land area of the Stavropol cluster, around 28,000ha is to be used for cereals farming, whilst the remaining land area is cultivated as grass-land for the purpose of raising beef-cattle. All the land has been continuously farmed, which significantly short-cuts the productivity ramp-up targets aimed for by Trigon Agri management.

The Stavropol region is located in Southern Russia and contains some of the most productive soils of the Black Earth region. Jointly with Krasnodar, Stavropol used to be one of the top two locations in the entire Black Earth area in Russia for field productivity during the Soviet period.

Following the completion of the Stavropol acquisition, Trigon Agri will increase its land under control to over 180,000 hectares, out of which around 130,000 hectares is located in the Black Earth regions of Russia (cereal production clusters in Stavropol, Samara and Penza), 45,000 hectares in the Black Earth regions of Ukraine (cereal production clusters in Harkov and Kirovograd) and around 5,000 hectares is located in Estonia and St Petersburg region of Russia (dairy production clusters of the company). Close to 110,000 hectares of the land which is located in Russia is expected to be in registered freehold by year end 2009, while all the 45,000 hectares located in Ukraine is under registered long term lease contracts with a right of first refusal on eventual acquisition (becoming possible when the respective legislation is set in place).

 

For further information please contact:

Investor enquiries:
Mr. Ülo Adamson, Chairman of the Board of Directors of Trigon Agri A/S
Tel: +372 66 79 200
E-mail: mail@trigonagri.com

 

Media enquiries:
Robin Walker/Matthew Newton, Finsbury Group
Tel: +44 207 251 3801

The Company’s Certified Advisor is SEB Enskilda.

 

About Trigon Agri A/S
Trigon Agri A/S is a leading integrated cereals and dairy commodities production, storage and trading company with operations in Ukraine, Russia and Estonia. Trigon Agri A/S shares are traded on the First North stock exchange in Stockholm, an alternative market place of the OMX Nordic Exchange. Trigon Agri A/S is managed under a management agreement by Trigon Capital, a leading Central and Eastern European operational management firm with around USD 1 billion of assets under management.

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