A/S Trigon Agri: acquisition of a new 30,000 ha cereals production farm in Rostov, Russia with exceptional characteristics

A/S Trigon Agri: acquisition of a new 30,000 ha cereals production farm in
Rostov, Russia with exceptional characteristics

 

With the following A/S Trigon Agri announces that it has signed an agreement for
the acquisition of a new 30,000ha production cluster in Rostov, Russia. The farm
to be acquired is exceptional due mainly to three strong competitive advantages:
location, contiguous layout and irrigation potential. These three factors
together allow the farm to have very high profitability potential.

The Rostov farm is located in the neighbourhood of the Novorossiysk port.
Novorossiysk port is the main export hub of grains from Russia through the Black
Sea transportation corridor. The proximity to this port leads to high average
prices received for the sale of grains, as domestic farm-gate grain prices in
Russia vary considerably depending upon the distance of the sale location from
the main ports.

The land area of the acquired farm is laid out as one large contiguous block of
ca 20 by 20 kilometres. The contiguous nature of the fields allows for the land
to be farmed with the most optimal logistics costs incurred, as field equipment
does not need to travel long distances to move from one field to another. This
results in a very low cost per tonne produced and allows for high profitability
margins.

The land to be acquired is connected to an irrigation channels system that is a
unique in the region. This system provides the option to develop irrigated
farming in the area at a future date. Applying irrigated farming could
potentially nearly double longer term average production yields achieved for
each hectare under production.

In addition to the three characteristics described above, which all provide the
basis for very high profitability, the farm to be acquired also owns farm-based
grain storage warehouses with a total storage capacity of 20,000 tonnes of
grains. Having the security of storage is vital for successful farming
operations in Russia, as there is a general lack of storage capacity in the
country and local farmers without their own storage are often forced to sell
their produce into a cyclically weak pricing environment during harvesting
seasons.

The transaction will be carried out as an acquisition of 100% of shares of the
operating entity that holds a free-hold ownership title to 30,000ha. As means of
payment the parties have agreed that Trigon Agri will pay for the acquisition
with two components: 18,500ha of land in free-hold ownership in its Samara
cluster and EUR 16 million in cash or in new shares of Trigon Agri. The
acquisition is subject to the satisfactory outcome of due diligence and the
approval of the transaction by the Board of Directors of A/S Trigon Agri. The
targeted closing of the transaction is in Q3 2012.

Ülo Adamson, President and CEO of Trigon Agri, comments on the deal: "This is a
very exciting step in our development in Russia. The planned Rostov transaction
allows us to substantially upgrade the quality of our land-portfolio in Russia
and makes it very likely that in medium term the profitability of our Russian
cereals production operations could potentially even out-perform our operations
in Ukraine, where our land portfolio does not allow for similar cost efficiency
in logistics."

Following the closing of the Rostov transaction, as well as the previously
announced Väätsa dairy farm acquisition, Trigon Agri's total land bank would
increase to 195,000ha, including 128,000ha in free-hold ownership in Russia,
4,200ha in free-hold ownership and under usufruct agreements in Estonia and the
remainder operated under long-term rental agreements.

Further information on the progress of both transactions will be provided in due
course in the form of stock exchange releases.

Investor enquiries:
Mr. Ülo Adamson, President and CEO of Trigon Agri A/S
Tel: +372 66 79200
E-mail: mail@trigonagri.com

About Trigon Agri
Trigon Agri is a leading integrated soft commodities production, storage and
trading company with operations in Ukraine, Russia and Estonia. Trigon Agri’s
shares are traded on the main market of NASDAQ OMX Stockholm. Trigon Agri 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.

For subscription to Company Announcements please contact us:
mail@trigonagri.com.
If you do not want to receive Trigon Agri press releases automatically in the
future please send an e-mail to the following address:
unsubscribe@trigonagri.com.