THE WOODLANDS, Texas,
July 9, 2018 /PRNewswire/ --
Company Secures
Option to Purchase Golden Ridge's Milling Assets
Second Quarter
Results Impacted by Bran Supply Issues
RiceBran Technologies (NASDAQ: RIBT) (NASDAQ: RIBTW)
(RBT), a global leader in the production and marketing of value
added products derived from rice bran, today announced that it has
entered into a stabilized rice bran ("SRB") supply agreement (the
"Supply Agreement") with Golden Ridge Rice
Mills ("Golden Ridge"), a state-of-the-art milling operation
located in Wynne, Arkansas. As
part of the agreement, RBT has also secured an option to acquire
the assets of Golden Ridge Rice
Mills.
Supply Agreement with Golden Ridge
The new three year Supply Agreement calls for Golden Ridge to
supply RiceBran Technologies with (and RiceBran Technologies to
purchase) at least 9.6 million pounds of SRB annually, which would
represent a 32% increase in the Company's SRB supply when compared
to the total 2017 SRB production volume. In order to fulfill
that obligation, Golden Ridge is building a new SRB production
facility that is expected to begin production no later than
August 1, 2018.
Brent Rystrom, RBT Chief
Operating Officer and Chief Financial Officer, noted: "Our supply
agreement with Golden Ridge achieves two important goals for
us. First, it provides us entry into the Arkansas rice market, where more U.S. rice is
produced and processed than any other rice-producing
state. Second, it provides us a source of SRB that is closer
to many of our customers in the Midwest and Eastern U.S."
RBT has agreed to lend $400,000 to
Golden Ridge and an additional $165,000 for the purchase of equipment from RBT
to complete the upgrades to Golden Ridge's SRB storage and
production capabilities. These loans will be repaid by Golden Ridge
through discounting the price of delivered SRB, with any unpaid
amounts payable in cash in 18 months.
Option to Purchase Golden Ridge Milling
Operations
As part of the Supply Agreement, RiceBran Technologies has
secured a six-month option to purchase Golden Ridge's milling
assets. Upon exercising that option, RBT will have 120-days
from the exercise date to complete the purchase of the milling
business assets. It is anticipated by the Company that the Golden
Ridge milling assets purchase would include a combination of the
assumption of certain liabilities and the issuance of RBT common
stock.
"We are excited to have the option to purchase Golden Ridge's
rice milling operation, a growing and profitable participant in the
Arkansas rice farming and
processing region," said Brent
Rystrom. "Golden Ridge would give us a permanent
physical presence to locate additional product and production
capabilities as we strive to be a highly profitable and valuable
company focused on stabilizing rice bran. The successful
completion of this transaction would also make Wayne Wilkison, the primary owner and operator
of the mill and a major farming entrepreneur in the region, an
important part of the RBT team and a significant shareholder."
Rystrom continued, "We believe owning and operating mills will
become an important part of our operating model going forward in
addition to maintaining and building our partnerships with
non-owned mills. Golden Ridge's location in the center of the
Arkansas' rice growing and
processing region is optimal, and its 32-acre property provides a
secure and sizable facility to place important capital expenditure
investments and expand production of rice and rice
co-products. Additionally, it will allow RBT to control an
important portion of its raw bran supply."
"Golden Ridge Rice Mills is
pleased to have entered into this supply agreement and is excited
about the opportunity to potentially join our company with RiceBran
Technologies," said Wayne Wilkison,
the primary owner of Golden Ridge Rice Mills along with
Glen Eaton. "Combining our new rice
mill located in the center of the rice growing region of
Arkansas with RBT's strong balance
sheet and plans for expansion should be a great fit. Together, we
can provide area rice farmers a strong partner to work with while
taking advantage of numerous business synergies to grow revenues
and improve profitability."
Dennis Dykes, Chief Accounting
Officer of RBT, noted "Golden Ridge Rice
Mills has been generating meaningful EBITDA in 2018, and
planned efficiency and process enhancements should further increase
profitability over the next six to nine months. We believe the
addition of the stabilized rice bran production facility to support
the Supply Agreement will serve to further enhance that EBITDA,
making this a highly attractive acquisition candidate for RBT."
Bran supply issues hurt second quarter results, likely to
also impact early part of third quarter
RBT's 2018 second quarter results were negatively impacted by
the bran supply disruption at our Louisiana facility that we previously
disclosed. This will likely cause RBT's sales to fall 4-6% in
the second quarter as we were unable to fill all orders from our
existing customers and new customer activity for SRB was limited.
RBT's losses in the 2Q will worsen from 1Q levels as gross profit
margins were negatively impacted by high transportation and
logistics costs related to supplying Midwest customers from
California SRB supplies and by poor absorption in some of our
production facilities due to several projects related to attaining
certification. The SRB supply issues will persist through at least
part of July until production of SRB begins at Golden Ridge and
production resumes in Louisiana,
and RBT expects to complete most of the certification-related
projects by October.
"We remain confident that our sales growth will accelerate as we
improve our SRB production and supply by August," said Brent Rystrom. "Our sales funnel looks
attractive on a go forward basis, and we look forward to updating
progress on our growth initiatives on our second quarter conference
call."
RBT's financial position remained strong in the 2018 second
quarter, helped by warrant exercises. There were 4.092 million RBT
warrants with a $0.96 strike price
exercised during the 2018 second quarter, generating cash proceeds
of $3.928 million to the Company. As
a result of the warrant exercises, RBT ended the second quarter
with approximately $7 million of
unrestricted cash and cash equivalents, strong liquidity and
shareholders' equity, and approximately 24 million shares
outstanding.
About RiceBran Technologies
RiceBran Technologies is a specialty ingredient company
servicing the food, animal nutrition, and specialty ingredient
products markets. We utilize our proprietary and patented
intellectual property to convert rice bran, one of the world's most
underutilized food sources, into a number of highly nutritious and
clean label ingredient products. The global target markets for our
products include food and animal nutrition manufacturers and
retailers, as well as specialty food, functional food and
nutritional supplement manufacturers and retailers. More
information can be found in the Company's filings with the SEC and
by visiting our website at http://www.ricebrantech.com .
Forward-Looking Statements
This release contains forward-looking statements, including, but
not limited to, statements about RiceBran Technologies'
expectations regarding the supply agreement with Golden Ridge Rice Mills, potential increases in
stabilized rice bran supply, the potential exercise of the option
and purchase of Golden Ridge's milling operations and any resulting
benefits to RBT, including any benefits due to any existing or
improved EBITDA in connection with the Supply Agreement or upon an
exercise of the purchase option. RiceBran Technologies does not
undertake to update forward-looking statements in this news release
to reflect actual results, changes in assumptions or changes in
other factors affecting such forward-looking information.
Assumptions and other information that could cause results to
differ from those set forth in the forward-looking information can
be found in RiceBran Technologies' filings with the
Securities and Exchange Commission, including its most recent
periodic reports.
Investor Contact:
Ascendant Partners, LLC
Richard Galterio
+1-(732)-410-9810
rich@ascendantpartnersllc.com
SOURCE RiceBran Technologies