Sino Agro Food, Inc. , a specialized investment company focused on protein food including seafood and cattle, today announced the carve-out of Tri-way Industries Ltd (“Tri-way”), its enterprise value assessed at US$340.6M, with Sino Agro Food, Inc. retaining and / or acquiring holdings of US$124.7M (of US$340.6M), which includes a provision for repayment of debt owed to SIAF. The carve out, which is immediately accretive to SIAF’s earnings per share and EBITDA, confirms the Company’s strategy to unlock the value of its current aquaculture business assets and plans for one of the world’s largest land-based aquaculture projects.
As discussed in prior communications, the purpose for the carve-out is to provide Tri-way a means toward capitalizing on market conditions that currently support entities with strong aquaculture focus. Therefore, in addition to its currently held assets, namely those of Aquafarm 1, Tri-way has completed the acquisition of assets held in Aquafarms 2, 3, 4 and 5 from their respective owners / investors, including SIAF, as well as rights to technology licensed from Capital Award, a wholly owned subsidiary of SIAF.
SIAF’s US$124.7M held interest in Tri-way represents 36.6% (36,600,000 common shares) ownership in the company: 23.89% (EV = US$81,367,997) as a result of retained interest in Tri-way, and 12.71% (EV = $US$43,289,545) acquired in exchange for outstanding debt owed to SIAF. Share settlement is expected to occur on or before March 31, 2017.
As a result of the carve-out, Tri-way will be registered as an “investment in associate” holding by SIAF, going forward.
The benefit afforded SIAF from the transition is 1) SIAF is accorded a (deemed) gain in the amount of US$53,495,649, reflected in its consolidated statement of profit and loss account for the Group as summarized (reconciled), below, and 2) taking into account the value SIAF held in Tri-way prior to the carve-out (i.e. as a wholly owned subsidiary) versus the value it holds today at as an investor in associate, including its ownership acquired in exchange for outstanding debt, coupled with Triway’s acquisition of Aquafarms 2, 3 4, and 5, Sino Agro Food, Inc. is provided in excess of a 4:1 increase in enterprise value held in Tri-way.
Solomon Lee, Chairman and Chief Executive Officer of SIAF commented, “This milestone represents one of the key steps in SIAF’s more than decade-long transformation.
“The Group strongly believes that separating into two industry-leading companies – one focused on the aquaculture industry and the other focused on investing in technology-based agriculture initiatives with substantial growth potential – will generate significant value for shareholders by enabling each company to focus on its specific business and strategic priorities.
“For SIAF, that means becoming a ‘solutions destination”, supporting a wide range of agriculture endeavors through the delivery of value-added technology and world-class operations.
“Additional information regarding Tri-way’s progress will be disclosed as it becomes available” concluded Mr. Lee.